SOCO has entered into a farm-out agreement wherein it has agreed to farm-out a 20% interest in the Nganzi Block, onshore the Democratic Republic of Congo (Kinshasa), to INPEX. INPEX is a current oil producer in another area of the DRC holding a 32.28% interest in various offshore producing fields and facilities and is one of SOCO's co-venturers in Angola. SOCO E&P DRC will remain as the operator with a 65% working interest in the Block. The remaining 15% interest is held by the national oil company, La Congolaise des Hydrocarbures ("Cohydro").
Per the agreement, INPEX will fund 40% of the cost, with half of the funding obligation subject to certain caps on cost overruns, associated with a three well exploration drilling program. Following the initial three well program, INPEX will fund its participating interest share of costs associated with the Block. In addition, INPEX will fund its participating interest share of all the historical costs certified as cost recoverable incurred by SOCO E&P DRC on the Nganzi Block.
The assignment of interests is subject to approval of the appropriate regulatory authorities of the Government of the Democratic Republic of Congo (Kinshasa).
The Nganzi Block covers 800 square kilometers, onshore western DRC. Interpretation of the seismic from a 2008 360 kilometer 2D seismic acquisition program is very encouraging with four large structures identified, three of which will be tested with the initial 2010 drilling program. Drilling of the first well, the Nganga well on previously designated Prospect "B" in the Block, commenced July 15.
Each well is anticipated to take approximately 40 to 50 days to drill with another two to three weeks added if testing is required. Pre-drill estimates place mean recoverable resources at approximately 200 million barrels of oil per each of the three structures to be drilled.
Ed Story, President and Chief Executive of SOCO, commented, "We are pleased to have a partner who, with its co-venturers, has successfully produced and exported oil for many years in the Democratic Republic of Congo."
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