Petrogal S.A, an oil and gas exploration and production company, agreed to acquire 50% participating interest in the Aljubarrota-3 concession, located onshore Portugal, from Mohave Oil and Gas Corporation, a subsidiary of Porto Energy Corp., for a purchase consideration of $7.8m. The consideration will include a 50% payment of Porto’s sunk costs, totaling approximately $4.3m, and a 50% participating interest share of approximately $3.5m with respect to drilling of a pre-salt well, the Alcobaca 1, in the Aljubarrota-3 concession.
Under the terms of the agreement, Petrogal intends to drill a pre-salt well, the Alcobaca 1, in the Alubarrota-3 concession with total expected well costs of approximately $7m. The well has a target depth of approximately 3,000 meters, with drilling expected to commence in late August and take approximately 45 to 55 days to complete. Upon completion of the drilling and testing of the Alcobaca 1, Petrogal has the option to acquire 25% working interest in each of Porto Energy’s other six concessions in Portugal in exchange for payments totaling no more than 25% of Porto Energy’s sunk costs in each concession. Porto Energy will remain the operator through the drilling of the Alcobaca 1 well, after which Petrogal will have the option to become the block operator.
The Aljubarrota-3 is a gas prone concession comprising approximately 300,000 acres of land. According to Netherland Sewell & Associates (NSAI) report in March 2012, the concession contains an estimated mean un-risked exploration resources of around 1,300 million barrels of oil equivalent and contingent resources of 45 million barrels of oil equivalent.
The transaction will enable Petrogal to further expand its oil and gas exploration portfolio in the on core areas of Portugal.
Joseph P. Ash, president and CEO of Porto Energy, said, “We are excited about our new partnership with Galp to test the pre-salt in the Aljubarrota concession. We continue to advance our joint venturing strategy thanks to our large working interest in each of our concessions, and the highly attractive prospects uncovered by our 3D seismic campaign. This venture will test a feature that was assigned approximately 100 million barrels of oil equivalent unrisked prospective resources in our March 31, 2012 resource update from Netherland, Sewell & Associates, Inc. This agreement allows us to move forward with our plan to test the pre-salt potential in our Aljubarrota concession and we are targeting a late August 2012 spud for the well. This second partnership indicates the high degree of interest we are generating in our prospective plays and we continue to build momentum with these types of initiatives, especially in the pre-salt which remains a primary and compelling target for us. It also underlines our commitment to bringing in industry partners to increase working capital, while mitigating the dilution to our shareholders, with an emphasis on long-term commitments with well-known groups in the region.”
The transaction is expected to be completed, subject to customary conditions including the receipt of all regulatory and government approvals.
The transaction implies deal value of $0.35 per boe of contingent resources.
From: https://www.researchviews.com/energy/oil-gas/exploration-production/DealReport.aspx?sector=Exploration%20and%20Production&DealID=197354