Fastnet the listed E&P company focused on near term exploration acreage in Morocco and the Celtic Sea, is pleased to announce that its wholly owned subsidiary Pathfinder Hydrocarbon Ventures Limited ("Pathfinder") has executed an exclusive option agreement (the "Option Agreement") with Oil and Gas Investments Funds ("OGIF") to farm into eight Exploration Blocks comprising the Tendrara Lakbir Petroleum Agreement (the "Tendrara Lakbir Licence" or the "Licence Area") onshore Morocco.
The Tendrara Lakbir Licence covers an area of 14,548 sq. km. It covers the majority of the Tendrara Basin, which lies between the Middle Atlas to the north and the High Atlas to the south and which is one of Morocco's prospective basins for Triassic gas. Five wells drilled within the Licence Area have encountered gas-bearing Triassic sands of the Tagi Formation (the "Tagi"). The Tagi is the host reservoir for Morocco's producing Meskala gas field, along strike to the west in the Essaouira Basin. All these gas discoveries have been charged from the prolific Silurian source rocks that are an integral part of the proven Palaeozoic-Early Mesozoic petroleum systems covering large parts of Libya, Algeria and Morocco.
The key terms of the Option Agreement with OGIF are as follows:
- Exclusive Option Agreement
- Entrance Fee payable to OGIF of USD 300,000
- Pay 100% of the cost to drill, test and complete an appraisal/pre-development well on the TE-5 Structure (which is where the last well was drilled in the License Area) - the well to be drilled on or before 28 February 2014
- Pathfinder to put together an Outline Plan of Development for the TE-5 gas discovery
- Pathfinder shall act as Technical Operator for the drilling of the well
- Upon completion of the well OGIF shall transfer on or before 30 September 2014 a Gross interest of 50% (a net interest of 37.5% after including the ONHYM carry through exploration of 25%) in the Tendrara Lakbir Licence to Pathfinder and Pathfinder shall assume the operatorship under the terms of the Petroleum Agreement and Association Contract, subject to all regulatory approvals being received
- Upon the successful completion of the well and the closing of the transfer of equity interest in the Tendrara Licence, Pathfinder shall provide OGIF with a USD 2.75 mm irrevocable bank guarantee, in the event Pathfinder withdraws from the Tendrara Licence, or which shall be returned to Pathfinder by OGIF upon completion of a further work programme whereby Pathfinder shall pay the costs of drilling two additional appraisal/pre-development wells by 1st April 2015 and 1st April 2018
1 The gross ONHYM carry on all Moroccan exploration licences is 25%.
The TE-5 gas discovery was made in 2006 in the Tendrara Licence. Petrophysical reservoir parameters were the best seen in the Tendrara Licence and comparable to those of the producing Meskala gas field. The well was re-entered and put on an extended well test in 2008 and encouragingly no significant pressure depletion was recorded. However the well failed to reach its optimum predicted deliverability rate of 4 to 7 MMCFD for the reservoir parameters verified by earlier log analysis. A number of promising pay zones were not perforated.
The TE-5 Structure has 3D seismic coverage which has been more fully interpreted following the 2008 testing programme. It shows a significant seismic anomaly in the Tagi northeast of the well which has been interpreted as indicating the presence of more favourable reservoir properties. It is this area that will be targeted by Pathfinder in the appraisal/pre-development well.
OGIF commissioned third party studies in 2011 following the TE-5 (Structure) extended well test and 3D seismic interpretation that indicates an important potential of gas.
Pathfinder's appraisal/pre-development well will be designed to firstly: narrow the range in GIIP by better well and 3D seismic correlation of reservoir attributes; and secondly to optimise potential well deliverabilities for input into an Outline Plan of Development.
The Tendrara Licence contains a large number of Tagi gas discoveries, prospects and leads with additional, as yet untested, potential in Palaeozoic formations.
If the drilling results are positive, there are opportunities either to export through the Maghreb gas pipeline; to supply power indirectly through the Ain Beni Mathar Power Plant; or directly through on-site power generation. OGIF is a local exploration company which has already done a lot of work and is a valuable partner to develop the area.
Paul Griffiths, Managing Director of Fastnet said:
"Subject to fulfilling our drilling commitment and regulatory approvals, we will be increasing our acreage position in Morocco. The Tendrara Licence offers our shareholders an exciting early drilling opportunity to appraise an existing gas discovery. Fastnet has sourced a rig for the upcoming Tendrara drilling operations. A successful drilling result at Tendrara could be the catalyst to move towards an Outline Development Plan and rapid monetisation of the original gas discovery. In this respect OGIF is a particularly valued partner as we share a common vision of being a joint venture partnership with ONHYM capable of making a material impact on the Moroccan gas market and assisting the drive for gas-fired power generation. It's a further example of Fastnet's management team's activity driven ethos which we believe creates greater potential to generate near-term shareholder value"
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