Petroceltic's Tunisian Farm-Out to Fund Seismic, 2010 Drilling Program
Petroceltic announced a farm-out on its Tunisian Ksar Hadada onshore oil and gas exploration permit. The farm-out, to a subsidiary of PetroAsian Energy Holdings Limited, a listed company in Hong Kong, will finance all of the Company's work commitments, including new seismic acquisition and the drilling of at least two wells. Petroceltic will retain a 27.03 percent interest and operatorship of the permit.
The overall capital commitment to the seismic and drilling work programme from PetroAsian is up to US $14.5 million. Ksar Hadada has been de-risked by the recent Remada Sud light oil discoveries immediately to the south that have confirmed the presence of a mature source rock and a working migration system in the area.
The farm out will give PetroAsian a 51 percent interest in the permit. In return, PetroAsian will pay all costs of drilling and testing of two new exploration wells and the acquisition and processing of 100 km of new 2D seismic data. This work will commence as soon as is practicable allowing for availability of rigs and other equipment and services.
Petroceltic's wholly owned subsidiary Petroceltic Ksar Hadada Limited (Petroceltic KHL) has farmed out a 29.93 percent interest to PetroAsian Energy (Tunisia) Limited (PetroAsian) from the Company's previous 57 percent interest. Petroceltic KHL will retain the 27.03% participating interest in the permit and continue acting as Operator.
Petroceltic's co-venturer in the permit, Independent Resources plc, is participating in the agreement with PetroAsian and has farmed out 21.03 percent of its previous 40 percent interest, giving PetroAsian an overall participating interest of 51 percent.
The primary targets on the Ksar Hadada block are Cambro-Ordovician quartzites and the Silurian Acacus Sandstone. Several large oil-prone prospects have been mapped. These are sourced by the Silurian Tanezzuft Shale, which is the main source rock for North Africa and the Middle East. The recent light oil discoveries in Remada Sud immediately to the south in the Cambro-Ordovician have validated the potential of the Ksar Hadada prospects. In adjoining Libyan territories very high oil production rates have been achieved on test from multiple Acacus wells, providing added attraction to the Acacus play on Ksar Hadada.
The Ksar Hadada permit is held under a Production Sharing Contract and the farm out follows last year’s renewal of the permit for three years from April 20, 2008. This transaction is subject to the receipt of the statutory approval of the Tunisian authorities, and the notification requirements of the Hong Kong Stock Exchange.
Commenting on the deal, Brian O'Cathain, Chief Executive of Petroceltic, said, "We are delighted to have reached this agreement with PetroAsian and Independent Resources on the funding of the planned work program for the exploration of this high potential asset. We expect to complete 2D seismic acquisition on the permit in 2009, with a view to drilling two exploration wells in 2010, subject to rig availability and partner & government approval. These two wells will follow on immediately after our planned Algerian drilling campaign."
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