Dominion Farms Out Deepwater Block 7 to Mubadala

Source: www.gulfoilandgas.com 10/5/2011, Location: Africa

Dominion is pleased to announce that it has agreed to farm-out a 20% working interest in Block 7, deepwater Tanzania to a subsidiary of Mubadala Oil & Gas (Mubadala). Following the completion of the transaction Dominion will hold an 80% working interest and operatorship in the Block. Under the terms of the agreement Mubadala will pay Dominion a $20 million cash consideration on closing and carry Dominion’s remaining 80% working interest in a new seismic programme expected to commence prior to year-end up to a cap of US$2,400,000.

As previously disclosed, a large 3D seismic survey was acquired on Block 7 at the end of 2010 over a lead identified as the Alpha structure. Dominion and Mubadala will work together to assess potential targets, both within Alpha and on other prospects mapped within the survey area. A more detailed review of Block 7 operations was recently provided in Dominion’s Interim Results for the six months ended 30 June 2011.

Completion of the transaction will follow establishment of Mubadala’s subsidiary and is then subject only to Tanzanian Government approval.

Andrew Cochran, CEO of Dominion, commented: “We are very pleased to have Mubadala as a partner in Tanzania and look forward to building a strategic relationship with them throughout the region. This agreement demonstrates the value of Dominion's offshore portfolio, which will benefit significantly from Mubadala’s technical expertise, financial resources and gas marketing experience. The planned partnership may seek to bring in another party as we approach Block 7's drilling phase next year, while Dominion accelerates work on the new acreage in Kenya.”

Maurizio La Noce, CEO, Mubadala Oil & Gas, commented: “This opportunity represents an important step in the continued growth of Mubadala’s international oil and gas portfolio and our entry into an important, new high-impact exploration province. We look forward to working with Dominion, with its knowledge and experience of the region, on this exciting new venture and, potentially, others in the future.”

Mubadala Oil & Gas is a business unit of Mubadala Development Company with exploration and production interests in the Middle East, North Africa, and Central and Southeast Asia. Current net working interest production is in excess of 400,000 barrels of oil equivalent per day (boepd).

PSC signed for Block L15, offshore Kenya

Dominion is pleased to announce that it has signed the Production Sharing Contract (PSC) for Block L15 in the Lamu Basin, offshore Kenya, giving the Company a 100% working interest and operatorship. The Company previously announced the award of L15 on 1st August 2011 through execution of Heads of Agreement with the Kenyan government. The PSC was signed by Dominion and the Kenyan Ministry of Energy in Nairobi.

Dominion will begin the initial exploration period of the PSC. The Company will reprocess existing 2D seismic data, carry out block wide G&G studies and acquire a minimum of 250km2 of 3D seismic data in the initial two year exploration period. This will result in a minimum gross expenditure of $2.85mm. Following this initial two year period, the Company can enter the second two-year period by committing to drill a single exploration well.

Block L15 lies immediately to the north of Block L8, where the reportedly 1 billion barrel Mbawa prospect shall likely be drilled in mid 2012. This new Block is on the Davy-Walu structural trend, as is Dominion’s Block L9. The only well in Block L15 is Kofia-1, which was drilled by Union Oil in 1985 and encountered good oil shows in the Palaeogene and Upper Cretaceous intervals. Planned drilling by other operators along the Davy-Walu trend over the next 12 months may serve to de-risk the prospectivity in both L9 and L15 before firm drilling commitments are made in either PSC.

Relinquishment of the Selous Block, Onshore Tanzania

The Tanzanian Ministry of Energy and Minerals has formally accepted Dominion’s request to relinquish the Production Sharing Contract (PSA) covering the Selous Contract Area, onshore Tanzania. The Ministry of Energy and Minerals has also allowed approximately $500,000 of licence and training fees previously paid by Dominion on the Selous Contract to be used as credit for Dominion’s Block 7, deepwater Tanzania operations.


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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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