Signature of Petroleum Agreement in Luderitz Basin, Namibia

abarrelfullabarrelfull wrote on 04 Jan 2012 11:23
Tags: namibia serica upstream

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Serica Energy plc (AIM & TSX: SQZ) announces that the Petroleum Agreement
relating to the award of Licence Blocks 2512A, 2513A, 2513B and 2612A (“the Licence”) between The Government of the Republic of Namibia, National Petroleum Corporation of Namibia (Pty) Limited (“NAMCOR”), Serica Energy Namibia B.V. (a wholly owned subsidiary of Serica) and Indigenous Energy (Pty) Limited, has been signed by The Honourable Isak Katali, Minister of Mines and Energy.

In respect of the award, Serica has agreed to make the following signature payments to NAMCOR:

  • US$1 million cash payment to NAMCOR
  • US$2 million through an allotment to NAMCOR of 6 million ordinary shares of Serica (which represents approximately 3.28% of the enlarged issued share capital of Serica)

The issue of the shares to NAMCOR is intended to provide NAMCOR and the Government of the Republic of Namibia with an additional return in the event of success with the project.

To the extent that the value of 6 million ordinary shares is more than US$2 million on the day of allotment, then Serica may reduce the number of shares allotted; alternatively, if the value is less than US$2 million, Serica may either increase the number of shares allotted or pay the cash equivalent of the difference to NAMCOR. Serica expects to allot the shares prior to the end of January.

The formal award of the Licence, which was initially announced by the Namibian Ministry of Mines and Energy on 2 November 2011, now enables Serica, as Licence Operator, to commence operations. Serica has accordingly, initiated enquiries with geophysical service companies to investigate the possibility of commencing 3D seismic survey operations during the current operational window.

During the initial four-year exploration period of the Licence, Serica is required to conduct an extensive 3D seismic survey and undertake reprocessing of existing 2D seismic data. Whilst Serica will evaluate opportunities to bring forward early drilling of the large prospects already identified it is expected that the first well in the Licence will be drilled in the third or fourth year of the initial period.

Commenting on the transaction, Tony Craven Walker, Chairman and Interim CEO, said:

"We are delighted to have reached agreement with the Ministry of Mines and Energy in Namibia and with NAMCOR to undertake a full appraisal of the hydrocarbon potential of the central Luderitz Basin blocks. We are looking forward to our new partnership, which has been particularly strengthened by the shareholding that NAMCOR will have in Serica. This will provide a good relationship between the two companies which can only work to the benefit of each as we explore the potential of the Licence Area. The award of the Luderitz Blocks to Serica marks a strategic step change for the Company and provides a solid basis for building a significant new business. We are very pleased to be working with NAMCOR to help unlock the hydrocarbon potential of Namibia.”

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