Addax Petroleum Corporation announced that it has agreed to fund an exploration well in the Ogueyi licence area, onshore Gabon, with the potential to earn a 50 per cent interest in the licence area. Perenco, as operator of the Ogueyi licence area, has recently spudded the exploration well targeting the Azango prospect.
Commenting, Jean Claude Gandur, President and Chief Executive Officer of Addax Petroleum said: “We are pleased to have acquired a potential interest in the Ogueyi licence area as this continues our strategy to build our property portfolio around core producing areas. This is also a demonstration of Addax Petroleum’s commitment and concerted focus on growth from exploration and provides good potential for an almost immediate impact to the Corporation.”
The Ogueyi licence area is an exploration block with a gross area of 1,339 km2 (330,900 acres) on the eastern edge of the Port Gentil basin, onshore Gabon. The Port Gentil basin is a well-established hydrocarbon province, producing mainly offshore from post salt formations of late Cretaceous age. The operator of the Ogueyi licence area has identified several prospects and leads on the block which is covered by a suite of approximately 2,551 km of 2D seismic data. The Azango prospect in the Ogueyi licence area was spudded in early May 2009 and is expected to reach a total depth of 1,685 metres in June 2009.
Operations for the Ogueyi licence area are conducted under a production sharing contract with fiscal terms similar to the other licence areas which Addax Petroleum holds in Gabon. The production sharing contract is in its second exploration phase due to expire in July 2009, however, a two year extension has already been negotiated by the operator. The commitments under the second exploration phase will be fulfilled with the drilling of the Azango prospect.
Under the terms of the farm-in with Perenco, Addax Petroleum has agreed to fund the Azango exploration well up to a maximum cost of $8 million. In addition, Addax Petroleum has the option to make additional staged payments to Perenco based on future exploration results in order to obtain a 50 per cent interest in the licence area. The ultimate assignment of the 50 per cent interest by Perenco to Addax Petroleum would be subject to the approval of the Government of Gabon. The Government of Gabon also retains a 10 per cent back-in right in the event of a commercial development.
