offshore

UK-based Mediterranean Oil & Gas (MOG) has signed a deal with TransUnion Petroleum and Nautical Petroleum, to partner with Cairn in the exploration of Area 3 Blocks 1, 2 and 3, offshore of Malta.

Cairn signed a three-year Exploration Study Agreement (ESA) with the Government of Malta in December 2012 for Area 3.

Located in the Sicily Channel, Area 3 covers an area of about 6,000km² and contains a number of prospective leads.

With an initial period of two years, the ESA includes geological studies, the reprocessing of existing 2D seismic data, the acquisition of new 2D seismic data and limited capital works.

As part of the agreement the partners will have the right to negotiate a production sharing contract, which can be extended for another year to acquire 3D seismic.

Melita Exploration Company, a wholly-owned subsidiary of MOG, will have a 40% working interest in the ESA as part of the deal.

"Cairn signed a three-year Exploration Study Agreement (ESA) with the Government of Malta in December 2012 for Area 3."

Cairn will receive 40% of the back costs which have been incurred during the preparation of the ESA application and expenditure to date, from Melita, and a payment of $365,000 on completion. Melita has already paid Transunion a cash fee of $50,000 in consideration for the assignment of their right to back in to the ESA.

Melita will also pay consulting fees of $150,000, in respect of their knowledge of the blocks, as well as future provisions for sharing in the successful exploration of Area 3.

The transaction will be closed upon receiving final approval from the Government of Malta granting Melita the consent to become a party to the ESA.

Mediterranean Oil and Gas chief executive, Dr. Bill Higgs, said: "We are very pleased to expand our footprint offshore Malta ahead of our exploration drilling in Area 4 later this year as MOG continues to geographically diversify exploration activities and capital spend."

"We look forward to working with Cairn to evaluate the exploration potential of Area 3, which we believe could mirror the exploration opportunities demonstrated elsewhere in the Sicily Channel," Higgs added.


Image: Covering an area of about 6,000km², Area 3 contains a number of prospective leads. Photo courtesy of freedigitalphotos.

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