Circle Oil's wholly owned subsidiary has signed a Petroleum Agreement with the Office National des Hydrocarbures et des Mines ("ONHYM") for the Lalla Mimouna area covering the Exploration and Exploitation of Hydrocarbons for the "Lalla Mimouna Nord" and "Lalla Mimouna Sud" Exploration permits situated in the Rharb Basin, Morocco.
The permits cover an area of over 2,200 sq kms and are issued for an initial period of 8 years with the right of automatic conversion to a minimum (but extendable) 25 year exploitation period in relation to areas where it is agreed that commercially exploitable hydrocarbons have been discovered. Under the terms of the agreement the percentage interest in the permits is COML 75% and ONHYM 25%.
COML has agreed to carry out an initial targeted 80 sq km 3D seismic survey to assist in the assessment and ranking of prospects already identified in the area and to assess any newly identified prospects. The agreement also requires the completion of a minimum 2 well drilling programme in the first 3 years of the permits.
Both Lalla Mimouna exploration permits are, in the main, geologically similar in nature to Circle's existing Sebou Permit (296 sq kms) and with the extended combined area it provides Circle with substantially greater opportunity to further explore for, and if successful, exploit more natural gas accumulations in the Rharb Basin.
Commenting on the agreement David Hough, Chief Executive of Circle Oil said, "This agreement is very significant as it provides Circle with a much larger low risk permit area, similar in both geology and background to our existing Sebou Permit. If our exploration program is successful in the new Lalla Mimouna area, with its already recognised potential for low cost, fast track development and production, the permits are ideally placed geographically to feed into the new gas pipeline planned for construction later this year. Continuing success here will add to the long term earnings contribution for the Company. Circle was delighted to be offered participation in these permits by ONHYM as it further underlines our commitment to assist in hydrocarbon exploration and production in Morocco. Future drilling programs will cover prospects within both our Sebou permit and the newly added Lalla Mimouna permits."
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