Pancontinental Oil & Gas has agreed to extend the agreement with Tullow Oil for exploration licence EL 0037 offshore Namibia
Tullow Oil asked for an amendment to the original farm-out agreement that will extend the deadline for Tullow Oil to make a ‘drill or withdraw’ decision. Pancontinental Oil & Gas has agreed to postpone the date from 11 August 2015 to 31 March 2016, giving more time to the joint venture to assess the results of the extensive exploration work that has already been carried out.
So far, Tullow Oil has spent approximately US$34mn on the exploration work since 2013 when the original agreement had been signed. Now, in order to retain its 65 per cent interest in the EL 0037 area, Tullow Oil must fully fund one exploration well on its own, with no cost to Pancontinental Oil & Gas.
Pancontinental Oil & Gas said that it had identified the potential of the licence area and along with co-venturer Paragon Oil & Gas, was awarded EL 0037 in June 2011. The following year, Pancontinental Oil & Gas increased its stake to 95 per cent by acquiring 10 per cent from its partner, leaving only five per cent with Paragon Oil & Gas. In September 2013, Tullow Oil farmed-in, acquiring 65 per cent interest in the offshore project.
In case Tullow Oil fails to drill the well, its entire interest reverts to Pancontinental Oil & Gas, the company added.
