Africa Oil has entered into a farm-out agreement with Raytec Metals Corp. ("Raytec"), previously announced on May 28, 2009. The Agreement relates to production sharing contracts in which Africa Oil has an interest in both the State of Puntland, Somalia and the Republic of Kenya.
In Puntland, Somalia, Africa Oil will transfer a 15% (fifteen percent) license interest to Raytec in the Nogal and Dharoor Petroleum Production Sharing Agreements.
In Kenya, Africa Oil will transfer a 10% (ten percent) interest in the Block 9 Production Sharing Agreement, a 25% (twenty-five percent) license interest in the Block 10A Production Sharing Contract and a 20% (twenty percent) interest in the Block 10BB Production Sharing Contract, which was recently acquired by the Company pursuant to its acquisition of Turkana Energy Inc.
Raytec will pay a disproportionate share of costs associated with the planned work programs to be carried out, in both areas, in 2009 and 2010. Raytec has also agreed that it will, within 30 days of the execution of the Agreement, deposit US $4 million into escrow as security for its payment obligations under the Agreement.
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