SOUTH AFRICA: Africa Oil Increases Interest in Block 3B/4B

Africa Oil has announced that it has entered an agreement to increase its operated working interest in Block 3B/4B, located in the Orange Basin offshore South Africa and on trend with the Venus, Graff, La Rona and Jonker oil discoveries, for an additional 6.25% interest. 

An independent review of the prospective resources and probability of geological success of an inventory of exploration prospects within Block 3B/4B, has reported total unrisked gross P50 prospective resources of approximately 4 billion barrels of oil equivalent. Probability of success ranges from 11% to 39% over the 24 prospects identified.

The Company has signed a legally binding Letter of Intent with Azinam Limited, a wholly owned subsidiary of Eco (Atlantic) Oil & Gas Ltd., to acquire the 6.25% interest for a total cash consideration of USD 10.5 million, to be paid in tranches on the following milestones:

• USD 2.5 million within 30 days after the signing of the LOI;
• USD 2.5 million upon the government’s approval for the transfer of the 6.25% to Africa Oil;
• USD 4.0 million upon the completion of a farm-out deal to a third party; and
• USD 1.5 million upon spudding of the first exploration well on the block.

Africa Oil is a major shareholder in Eco with a 15.02% shareholding. The Company’s Directors other than Mr. Keith Hill, who is also a Director of Eco have reviewed and approved the terms of the LOI.

The Company will hold an operated WI of 26.25% subject to and, on the receipt of the government’s approval for the transfer, with Azinam holding a 20.00% WI and Ricocure (Proprietary) Limited holding the remaining 53.75% interest.

The Company and its Block 3B/4B partners are progressing plans to conduct a two-well campaign on the block and are in discussions with various potential partners to farm out up to a 55% gross working interest in the Block. The Company and its partners have also selected a leading South African environmental consulting firm to conduct a comprehensive Environmental and Social Impact Assessment process in preparation for permitting and drilling activity on the block.