Petrel Finalizes Production-sharing Deal with Jordan

Petrel Resources PLC has finalized a production sharing agreement (PSA) on the East Safawi Block in Jordan. King Abdullah of the Hashemite Kingdom of Jordan attended the ceremony, where a total of $2.5 billion of investment was announced by the Jordanian authorities.

East Safawi forms part of the prospective Arabian Desert. The East Safawi block adjoins the producing gas field at Risha and oil-producing blocks in Syria. The oil targets are in shallow formations and there are well-established gas plays at depth.

Jordanian production sharing terms are clear and attractive. The contractor receives 60% of oil production – or gas equivalent - up to 10,000 barrels daily, with a sliding scale to a 35% share of production over 100,000 barrels daily oil equivalent. There were no material objections to the Petrel contract in parliament or elsewhere.

The agreement envisages a three-year first-phase exploration. Initial work includes seismic reprocessing and reinterpretation and new seismic. Targets identified are expected to be drilled in 2008/09, depending on operational developments.

Jordan is a stable constitutional monarchy. Building on the success of his father King Hussein, King Abdullah personally attended the East Safawi and other signing ceremonies, which underlined Jordan's commitment to responsible international investment.

Historically, a concern was that Jordan is most prospective for gas. This is now seen as an advantage due to the massive international increase in demand for natural gas, both in the region and further. With the Arab gas pipeline project well advanced, and planned to extend to Turkey and into the European network, Jordan will be both a supplier and reliable access route for Middle Eastern gas exports to Europe.

Petrel Managing Director David Horgan commented:

"East Safawi is prospective: analysis reinforced our belief that the Arabian Desert has considerable oil and gas potential.

"At a time of resource nationalism elsewhere, we are heartened by Jordanian consensus in favor of this project. There were no objections in Parliament or the mainstream media to Petrel's contract. His Majesty publicly demonstrated commitment by hosting the signing ceremony – giving comfort to citizens and investors.

"Winning the East Safawi Production Sharing Agreement is the culmination of three years work. Terms are world-class, especially for oil. Jordan is both secure and pro-business, complementing Petrel's Iraq-centered strategy."