Cove has concluded a conditional farm-in agreement with Dynamic Energy Exploration and Production Corporation ("DEPCO") to acquire a 15% participating interest in five contiguous deepwater blocks L5, L7, L11A & B and L12 (the "Blocks") covering an area of over 30,500 sq kms, offshore Kenya, East Africa. The five Blocks are held in a Joint Venture by Dynamic Global Advisors Kenya Limited, a wholly owned subsidiary of DEPCO with a 30% interest (15% after farmout)and Anadarko Kenya Company, an affiliate of Anadarko Petroleum Corporation ("Anadarko"), the operator of the blocks with a 70% interest.
Cove is paying US $15.5m (the "Consideration") inclusive of acquisition costs, a reimbursement of DEPCO's past expenditure on the blocks and funding for Cove's and DEPCO's forward work program during the first exploration phase which extends to June 2012. US $10.5m of the Consideration is payable in cash with the balance of US $5m in Cove shares to be allotted at the time of closing.
It is expected that this transaction will close in Q3 2010 pending receipt of normal partner, and government consents ("Closing"). In this respect Anadarko has already given its preliminary approval.
The new ordinary shares in Cove allotted as part of the Consideration will be priced at an average of the Cove share price for the 5 business days prior to Closing and will rank pari-passu with existing ordinary shares. DEPCO have agreed to a lock-up on such shares for six months from their date of admission to trading on AIM.
The Company is pleased to announce that drilling and associated operational activities continue on the Ironclad well and the Company will make a further announcement as and when appropriate.
John Craven, Chief Executive of Cove, said, "We are delighted to have secured this farm-in. These Blocks effectively cover from north to south most of the Kenyan deepwater acreage where we have identified on seismic data geological features that are similar to what we see in our existing interests in Mozambique and Tanzania.
"Aligning with Anadarko ensures operational and exploration continuity in our core area of East Africa with offshore Kenya as a natural follow on to our active exploration program in Mozambique where operations on the Ironclad well are continuing."
Most Popular Articles
From the Career Center
Jobs that may interest you