Premier
buys into West African assets
Posted: 29 May 2003
Premier has reached an agreement with Fusion Oil & Gas plc
(Fusion) to purchase a number of West African interests including
the Chinguetti and Banda oil discoveries offshore Mauritania.
In Mauritania, Premier will acquire Fusion’s 6 per cent interest
in PSC B (containing the Chinguetti discovery) and 3 per cent interest
in PSC A (containing the Banda discovery) for a cash consideration
of $10 million and an overriding royalty.
The overriding royalty is payable out of production revenues from
all developments on these PSC’s and is a production related
payment on a sliding scale varying with oil prices. For Chinguetti,
the value of the royalty is estimated at $5 million (net present
value at 10 per cent p.a.), or $8 million (undiscounted), at a constant
real oil price of $20 per barrel.
In addition, Premier will, on approval of a development plan, pay
a $2 million bonus to Fusion for each new discovery resulting in
a 50 mmbbl development on PSC B (excluding the existing discovery
at Chinguetti) and a $1 million bonus for each new discovery resulting
in a 50 mmbbl development on PSC A (excluding the existing discovery
at Banda).
The Chinguetti discovery is expected to receive development consent
in the next 12 months and production of the estimated 120 mmbbls
of oil reserves (Premier share 7.2 mmbbls) is planned to commence
in 2005/6.
A multi-well drilling programme covering both PSC A and PSC B is
expected to begin by late 2003. There are many other attractive
exploration prospects to be pursued in both PSC’s.
In Gabon, Premier will acquire an 18 per cent interest in the Iris
Marin and Themis Marin offshore PSC’s in return for funding
its own costs and a further 18 per cent of costs on Fusion’s
behalf through to the completion of the second well on each PSC.
These shallow water PSC’s have multiple Gamba formation pre-salt
targets of approximately 20-40 mmbbls and are on trend with Premier’s
existing Dussafu (formerly Phenix) block.
In Saharawi Arab Democratic Republic (SADR), Premier will acquire
35 per cent of Fusion’s rights under a Technical Cooperation
Agreement with the government of the SADR in return for the funding
of 35 per cent of costs incurred up to any future licence award.
In each licence in which it chooses to participate (to a maximum
of three), Premier will fund 70 per cent of the initial exploration
costs capped at $3 million and 35 per cent thereafter. The area
is virtually unexplored as it is currently under a dispute over
sovereignty.
As part of this transaction, Premier has granted Fusion the right
to receive a 5 per cent interest from Premier’s 100 per cent
interest in Block 2 (the Sinapa block) and in Blocks 4A and 5A (the
Esperanca blocks) in Guinea Bissau, these rights to be exercised
within 60 days of completion of the drilling of the next well on
each block.
The agreements are subject to routine government and partner approvals.
Charles Jamieson, CEO of Premier Oil, said, "This exciting
deal with Fusion is a significant advance towards our goal of building
a business in West Africa. In Mauritania we look forward to the
early development of the Chinguetti and Banda discoveries and the
significant exploration potential of these blocks.
The addition of two more interests in Gabon to our current Dussafu
(Phenix) block increases our exposure to the highly prospective
shallow water pre-salt play.
This deal is an excellent example of Premier’s strategy of
exposing shareholders to significant added value and upside through
commercial dealmaking.”
Posted by Richard Price,
Editor Pipeline Magazine
Information supplied by companies
or PR agencies who are responsible for content. Send press releases
to info@pipelinedubai.com |
