Eric Watkins
OGJ Oil Diplomacy Editor
LOS ANGELES, May 20 -- Petrobras Oil & Gas BV, a unit of Brazil's Petrobras Brasileiro SA (Petrobras), paid $16.04 million to Chariot Oil & Gas Ltd. subsidiary Enigma Oil & Gas Exploration Ltd. for a 50% stake in an exploration block off southern Namibia.
Under terms of the farm-out agreement, in return for a 50% interest in Block 2714A, Petrobras said it will pay Enigma:
-- A cash payment of $16.04 million, comprised of a cash consideration, past costs including the reimbursement in respect of the recently acquired 3D seismic program in Block 2714A.
-- In the event of a commercial discovery, payment of a production bonus equal to 4.75% (after royalties) of Petrobras's share of production up to either 2 million boe or a value of $118 million, whichever occurs first.
In addition, Petrobras said it will perform geological and geophysical studies in order to model the petroleum system of the area, with the option of withdrawing from the block before drilling a well.
"The initial period of exploration expires in August 2010," Petrobras said, adding that the document signed by both companies is "still subject to approval of the Minister of Mines and Energy of Namibia."
The block covers an area of 5,500 sq km in 150-1,500 m of water. The Brazilian firm said the block is "in the Southwest African Coastal basin, between Orange and Luderitz subbasins, at an average distance of 80 km from the coast."
It said Enigma recently concluded a 3D seismic program of 1,000 sq km. Processing and interpretation of these data are contining, and a further 3D seismic acquisition in Block 2714A of 1,500 sq km is scheduled to start later this year.
After evaluating the 3D seismic data, Petrobras said it may choose to enter a renewal period of the contract that includes a commitment to drill an exploratory well and becoming operator of the block.
Enigma will remain as operator of the block until the end of the initial exploration period with Petrobras then having the option of becoming the operator. If Petrobras chooses not to enter the first renewal period, Enigma has the option to reclaim its interest in the block.
Contact Eric Watkins at [email protected].
