Dominion Petroleum Limited has entered into an Execution Agreement to acquire a 75% operated working interest in the production sharing contract for Blocks 4, 5, 6 and 7 of Area 4 Offshore Malta from Phoenicia Energy Company Limited, a wholly owned subsidiary of Mediterranean Oil & Gas plc (MOG), pursuant to a draft farm-in agreement. Closing of the acquisition is conditional upon Maltese government approvals and completion of the Placing of the subscription shares.
Under the terms of the farm-in agreement, Dominion will meet certain exploration costs up to a cap of US$1,260,000, on behalf of MOG in relation to its remaining 15% working interest. Dominion will also compensate MOG for a total amount of US$900,000 in certain historic costs, through the non-refundable sum of US$225,000 and a closing sum of US$675,000 under the farm-in agreement. The exploration costs to be paid by Dominion on behalf of MOG is US$0.189 million. The aggregate deal value including the historic costs is US$1.089 million.
The Maltese PSC is situated to the north of Libya, covering an area of 5,715 sq km in Maltese waters. It includes both the Cretaceous rift potential of the Melita-Median Graben and the confirmed Eocene carbonate play of North Africa. According to RPS Energy's report on Area 4, effective March 2006, there are number of prospects identified within the area, of particular interest is the Tarxien prospect, a lower Eocene carbonate build up. The reporat also estimated the prospect to have a gross recoverable un-risked P50 prospective oil resource of 115 MMbbl with an 18% chance of success.
The work obligations of the current period of the Maltese PSC comprise the acquisition of 1,000 sq km of 3D seismic data and the drilling of one exploration well. The first exploration period is valid until January 2013 and there is a minimum spend requirement of US$5 million. The company anticipates that the 3D seismic survey will cost between approximately US$8 million and US$10 million gross to undertake, which will satisfy the minimum spend requirement. The results of the seismic survey will enable the JV partners to define and evaluate the Tarxien prospect and other identified opportunities within Area 4, prior to any drilling decision. The long-offset 3D will also allow for a clearer analysis of the pre-tertiary rift-fill below the Eocene carbonates and potential Cretaceous targets.
Post transaction the ownership structure in the blocks will be: Dominion Petroleum (75%, Operator), MOG (15%) and Leni Gas & Oil (10%).