Maha Energy AB will sell its 65% working interest in Block 70, Oman, to Mafraq Energy LLC for a consideration amounting to $14 million.
Mafraq Energy will be responsible for the project and cover all costs as from Dec. 1, 2023. Up to the closing date, Maha will receive a parcel of the purchase price equivalent to $2 million. The earnout will be up to $12 million, linked to actual produced volumes from Block 70. Payment will start from a cumulative net production volume of 1 million bbl with a maximum to be reached if the production volume reaches 12 million bbl. After closing, Maha will be released from all obligations and liabilities regarding Maha Oman.
The exit is subject to signing a definitive sale and purchase agreement, and satisfaction of the relevant closing conditions, including approval of the Government of the Sultanate of Oman.
Maha was awarded onshore Block 70 in Oman in 2020. In 2022 and 2023, the company conducted a comprehensive work program and fully concluded the minimum work obligations of the initial phase of the exploration and production sharing agreement (EPSA). A short-term production test commenced in 2023, during which five out of eight new drilled production wells produced oil to surface at an initial estimated average rate of 300 bo/d (OGJ Online Mar. 20, 2023). The produced oil was heavy with 11-13 ° API viscosity, higher than pre-testing estimates. Due to the high viscosity, the oil did not meet processing specifications. The initial phase of the EPSA will end Dec. 31, 2023.
Kjetil Solbraekke, chief executive officer of Maha Energy, said that “Block 70 has a high viscosity oil. I believe the project has to consider a heat influx strategy to deal with this. It will require new tests, significant investments and a very dedicated operator, which I believe we will have with Mafraq Energy who has worked on this asset since the very beginning.”
In 2022, Maha Energy AB, through its subsidiary Maha Energy (Oman) Ltd., agreed to farm out 35% of its 100% operated interest in Block 70 onshore Oman to Mafraq Energy LLC. Maha holds 65% and is operator of the block, which contains Mafraq field.
