Independent African Petroleum has signed a non-binding heads of terms and a binding exclusivity agreement with a listed oil and gas company to fund a deep-water drilling campaign off Senegal and Gambia.
The heads of terms and exclusivity agreement provide a framework for the incoming third party to secure a 70 per cent operated interest in the Company's SOSP production sharing contract (PSC) in Senegal and the A1 and A4 licences in The Gambia.
During the period of exclusivity African Petroleum and the incoming party will work together to finalise negotiations with the respective governments in order to amend the work commitment in Senegal and to enter the next phase of the licences in The Gambia, complete due diligence, and agree and execute farm-in documentation.
The terms propose that the incoming party will pay up to US$8.5 million to the Company, fund 100 per cent of at least two deep water offshore wells at a gross cost of up to US$35 million per well, fund 100 per cent of a 3D seismic acquisition, fund 100 per cent of pre-stack depth migration processing/reprocessing, and potentially fund 100 per cent and 85 per cent respectively of a further two wells at a gross cost of up to US$35 million per well.
“This is a significant development for the company with a well-funded credible partner with strong deepwater drilling experience. Whilst final farm-in agreements are subject to completion and the successful outcome of negotiations with the governments in Senegal and The Gambia, we are confident that the proposed partner’s reputation, strong balance sheet and appetite to explore the potential of these exciting licenses with the drill-bit, will greatly increase our ability to conclude the discussions with an outcome that benefits all parties,” says African Petroleum CEO Jens Pace.