HOUSTON, Feb. 6�Gambela Petroleum Corp. has signed a production-sharing agreement with Ethiopia, said parent company Pinewood Resources Ltd., North Vancouver, BC.
It has committed to spend more than $5 million on work commitments. In order to cover costs, Gambela is looking for an equity partner.
The 15,000 sq km concession area is in the Gambela area in southwestern Ethiopia. It includes the entire Melut basin, said Pinewood.
The agreement provides for a 4-year exploration period, which Gambela can extend 4 years through work commitments and minimum expenditures.
During the first exploration period, Gambela must spend $50,000 (US) in the first year, $2.1 million in the second year, $900,000 in the third year, and $2 million in the fourth year.
The company must shoot, process, and map at least 1,000 km of seismic within 17 months of the signing and drill one exploration well within 38 months.
During the first 2-year extension, Gambela must shoot, process and map at least 200 km of seismic data, costing at least $600,000, and drill one exploration well costing at least $2 million.
During the second 2-year extension, Gambela must acquire at least 200 km of seismic plus drill one more exploration well at a total cost of $2.6 million.
If a commercial discovery is made, a development area will be determined and the period of development will continue for 25 years.
Gambela must also make land rental payments of $4-$10/sq km/year during the exploration period and $200/sq km during a development period.
Ethiopia will receive a sliding scale royalty of 6-12% on crude production and 2-6% on gas production.
Gambela will also pay a 30% corporate tax in Ethiopia. The country reserves the right to acquire up to 5% participating interest in each commercial find.
