Circle Oil Signs Farm-Out Agreement on its Namibia Licence

Source: www.gulfoilandgas.com 9/9/2008, Location: Africa

Circle Oil signed a farm-out agreement on its Ovambo Basin licence in Northern Namibia with Petroholland Ltd. The licence covers an area of over 70,000 square kilometres immediately to the south of the Angola Namibia border.

Under the terms of the agreement Petroholland will acquire a 70% undivided interest in the licence with Circle retaining a 20% interest and Namcor, the Namibian State oil company holding a 10% share.

In consideration for the 70% interest in the licence, Petroholland has agreed to pay Circle US$15 million in cash and cover all of the costs attributable to Circle's 20% share of exploration and development expenditure through to production.

The Namibian Minister for Energy and Mines, The Honourable Erkki Nghimtina MP, has already approved the assignment of the 70% share in the licence to Petroholland and has agreed that Petroholland will become the operator of the licence. Namcor has elected not to exercise its pre-emption right under provisions of clause 12 of the current Joint Operating Agreement.

Petroholland has engaged the services of Halliburton consultants to provide the technical capability, personnel and resources to fulfil its obligations under the terms of the farm-out agreement and the Joint Operating Agreement.

David Hough, CEO of Circle, said: “This is a good deal for Circle providing us with further cash for investment in our work programmes. It also provides us with a free carry on the Ovambo Basin licence, and any subsequent upside. We look forward to working with Petroholland with a common goal to achieve success in the licence.”


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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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