Dragon Oil to farm in to 55% of Tunisia's Bargou
Cooper Energy farms out stake, well expected to be drilled in 2012
Cooper Energy Limited has announced its wholly owned subsidiary, C.E.Tunisia Bargou has signed a Farm-in Agreement with Dragon Oil Ltd., a wholly owned subsidiary of Dragon Oil plc, under which Dragon Oil will acquire a 55% working interest in the highly prospective Bargou Permit offshore Tunisia, North Africa.
Dragon Oil is an international oil and gas exploration, development and production company quoted on the London and Irish Stock Exchanges with reserves of 639 million barrels of oil and condensate and 1.6 trillion cubic feet of gas.
Laurie Shervington, Chairman, Cooper Energy, said: “Cooper Energy is delighted to welcome a strategic partner with the technical and operational experience and capability of Dragon Oil into the Bargou Permit and we look forward to a successful and productive Joint Venture.”
“The Farm-in represents a critical step in the appraisal and development of the Hammamet West Oil Field. Dragon Oil’s experience in developing the Cheleken Contract Area fields offshore Turkmenistan will be invaluable,” he added.
“We are confident Hammamet West-3 has the potential to unlock significant shareholder value. Dragon Oil will be of great technical assistance in assessing this and other prospects in the Bargou Permit. We are looking forward to testing the production potential of the Abiod Formation by drilling a horizontal well using modern drilling techniques thereby increasing the potential for the reservoir to flow at commercial rates,” Mr Shervington said.
“We will work with Dragon Oil and Jacka Resources to lock in a well design with a view to drilling the well in 2012.”
Dr Abdul Jaleel Al Khalifa, Chief Executive Officer, Dragon Oil plc, commented: “Dragon Oil is pleased to work with Cooper Energy and Jacka Resources to drill the Hammamet West-3 well to test the development potential of the Abiod Formation in the Bargou Permit. We believe our experience offshore Turkmenistan with complex and challenging reservoirs will be useful in better understanding, appraising and developing the Hammamet West Oil Field.
In addition to drilling the Hammamet West-3 well, the Permit also contains a number of other prospects that we expect to evaluate further with our new partners. We look forward to participating in this Permit and entering Tunisia’s oil and gas sector.”
About the Bargou permit - Hammamet West
The Bargou Permit is considered to be a highly prospective exploration and appraisal block with predominantly offshore prospects and leads in water depths of 50m to 100m within the Pelagian Basin, covering an area of 4,616km2. Hammamet West-3 is a major focus of the exploration activity in the permit.
The Pelagian Basin is a prolific producing basin spanning Tunisia and Libya and contains some of Tunisia’s most productive oil and gas fields.
Following completion of the Farm-in conditions, the Bargou Joint Venture will comprise Dragon Oil 55%, Cooper Energy 30% and Jacka Resources 15%.
An Independent Experts Report prepared by UK-based consultants Senergy in May this year confirmed a significant volume of oil in place in the Hammamet West Oil Field and, as a result, the Company believes this oil may ultimately prove to be a substantial economic oil resource. The Report estimated the Oil Field has oil in place in a range between 130-600 million barrels (P90-P10).
The Company’s analysis of Hammamet West 3D seismic results undertaken earlier in the year indicates a mid-case (P50) Contingent Resource estimate for the Abiod Formation reservoir of 101 million barrels of recoverable oil with further discovered oil potential within the shallower Birsa reservoir.
Farm-in Agreement - Key Terms
Under the terms of the Farm-in, Dragon Oil will earn a 55% participating interest in the Bargou Permit as follows:
- Dragon Oil pays 75% of the cost to drill the Hammamet West-3 well, according to an agreed well plan scope, up to a capped well cost of US$26.6 million (on a 100% basis);
- If the well cost exceeds US$26.6 million, costs in excess of this amount will be shared between Cooper Energy and Dragon Oil pro rata to their participating interest (Dragon Oil 55%; Cooper 30%).
- The Farm-in is subject to Government of Tunisia and joint venture approvals and the completion of legal and commercial due diligence by Dragon Oil.