Jacka Resources has announced that Jacka Resources Somaliland Limited has signed a second Farmout Agreement with Sterling Energy (East Africa) Limited for the Odewayne Block Production Sharing Contract, onshore Somaliland, East Africa.
Sterling will acquire JRSL’s 15% participating interest in the PSC for a total cash consideration of US$12 million and approval for the transaction has been received from the Government of Somaliland with the deal completion expected under the Second Sterling Agreement within the next week.
The first Sterling agreement was reached in November 2013 when Jacka announced JRSL’s farm-out of a 15% participating interest in the Odewayne block to Sterling with the deal closing in January 2014.
Under the terms of the Second Sterling Agreement Sterling will acquire an additional 15% interest in the PSC from JRSL, effective on completion and pay JRSL US$2.4 million on signature of the Second Sterling Agreement and $9.6 million on completion.
JRSL will also cancel the US$12 million future conditional payments due under the Original Sterling Transaction.
The PSC is currently in the Third Period (expiring November 2014) with an outstanding minimum work obligation of 500 km of 2D seismic. The minimum work obligation during the Fourth Period of the PSC (expiring May 2016) is for 1,000 km of 2D seismic and one exploration well.
“Jacka remains enthusiastic about Somaliland and considers the option to acquire another 5% interest in the future as providing the Company and its shareholders with an opportunity to re-enter the project as work advances. Jacka would like to take this opportunity to thank the joint venture partners and the Somaliland government for their assistance over the years and in approving this key transaction for the Company. We wish them and the people of Somaliland success with the future exploration program,” says Jacka’s Managing Director, Bob Cassie.
The Odewayne PSC covers block SL6 and part of blocks SL7 and SL10, onshore Somaliland, comprising an area of 22,840 square kilometres. Jacka entered the Odewayne PSC in March 2012 through a farm-in to Petrosoma’s interest, initially acquiring 50% with the potential to ultimately increase to 85%.
Following the second farmout the PSC participants are: Genel Energy Somaliland Limited (Operator) with 50%Sterling Energy (East Africa) limited with 40 percent from 25 percent and Petrosoma limited at 10 percent with Jacka retaining an option to acquire a 5% participating interest through its initial farm-in agreement with the latter.
The next planned stage of the work program includes acquisition of an extensive 2D seismic programme to define drillable targets.
Operations in Somaliland have been delayed by security concerns and Genel Energy, the operator on behalf of the joint venture partners, is working with the Ministry of Energy and Minerals to resume operations as soon as practicable.