UK-based Longreach Oil and Gas and Cairn Energy have signed a farm-in agreement for crude oil and natural gas exploration in the Foum Draa Offshore area, in Morocco.
Under the agreement, Cairn Energy, through its subsidiary Capricorn Exploration and Development Company, will acquire a 50% operated equity interest in Foum Draaa from Longreach Oil and Gas and its joint venture partners, San Leon Offshore Morocco and Serica Foum Draa.
The stake will be acquired on a pro-rata basis, based on Cairn’s respective equity interests from each of Longreach, San Leon and Serica.
Bryan Benitz, Longreach Oil and Gas Chairman and CEO, commenting on the deal said: "The work undertaken on the permits has shown considerable opportunities and bringing in a new partner, such as Cairn, will enable the partners to conduct near term exploration drilling on this licence."
Cairn Energy will pay $1.5m as part of its equity interest share of past costs and $60m towards drilling the first commitment well, under the terms of the first extension period of the Foum Draa permits.
As a result of the farm-out, Longreach will hold an ongoing interest of 2.5% in the Foum Draa permits with San Leon and Serica holding 14.17% and 8.33% respectively.
The joint venture partners have already informed the Moroccan authorities of their intention to proceed with the First Extension Period, which entails the drilling of a commitment well targeted for 2013.
