Tethys Oil entered into an agreement with Mitsui E&P Middle East, a subsidiary of Mitsui, whereby Mitsui will acquire a 20 percent interest in Blocks 3 and 4 onshore Oman. The transaction is subject to Government approval.
After the Transaction, Tethys will hold a 30 percent interest in Blocks 3 and 4 with Mitsui holding 20 percent and the operator Consolidated Contractors Energy Development (Oman) holding the remaining 50 percent.
In consideration for the 20 percent interest acquired from Tethys, Mitsui will upon closing of the transaction pay to Tethys USD 20 million cash, as well as undertake to fund Tethys share of non exploration related capital expenditure up to USD 60 million on Blocks 3 and 4 effectively from January 1, 2010. In addition Mitsui will pay to Tethys a production bonus amounting to USD 10 million in the event combined future production from the two Blocks come to exceed 10,000 barrels of oil per day.
"We are honored and delighted to have entered into this agreement with one of the largest and most successful companies in the world. Mitsui will bring a wealth of knowledge, experience and expertise from the oil & gas sector in the Middle East region including Oman through its existing upstream assets (Oman Blocks 9, 27 and 54), LNG projects in Oman, Qatar and U.A.E. and crude oil marketing to bear upon Blocks 3 and 4. With the addition of Mitsui to the partner group the probability that the full potential of Blocks 3 and 4 will be realized has increased dramatically. And of course for Tethys this agreement is tremendously important in that in one stroke the foreseeable investment needs relating to Blocks 3 and 4 seem satisfied," said Magnus Nordin, Managing Director of Tethys Oil AB.
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