A farm-out agreement has been reached between Bowleven and Victoria Oil & Gas (VOG) for a production sharing contract (PSC) for the Bomono Block, Cameroon
The Bomono permit is located in the onshore extension of the Douala Basin and is characterised by numerous surface oil seeps as well as a strong gas presence. It is largely unexplored.
Gaz du Cameroun Bomono (GDC Bomono), which is a wholly owned subsidiary of VOG, will take an 80 per cent stake in the Bomono PSC, with Bowleven's subsidiary EurOil keeping the remaining 20 per cent share and continuing as operator. Gas from the PSC will be sold to GDC minus a tolling fee. The gas price paid will be a weighted average received by GDC for its total domestic sales less a tolling fee for use of the pipeline network, with the pipeline connection from Bomono to the main network managed and funded by GDC.
GDC Bomono will complete the civil engineering works required for the gas processing plant installation at the Bomono site at an estimated capital cost of US$6mn.
Bowleven has agreed to pay GDC Bomono 50 per cent of any deficit, limited to a maximum payment of US$2 million, if the first three years of net income received by GDC Bomono is less than the development expenditure incurred. EurOil will receive a 3.5 per cent royalty from GDC Bomono’s production share of hydrocarbons, with an aggregate cap limiting the total royalty payments to US$20 million.
"We are pleased to have reached this milestone for Bomono and look forward to working together with both VOG and the Cameroon authorities to realise the maximum potential this asset has to offer.," said Kevin Hart, CEO of Bowleven.