Monday, August 01, 2011
Dominion Petroleum Ltd.
Dominion Petroleum announced the award of Block L15 of the Lamu Basin, offshore Kenya. This new award follows Dominion having secured Block L9, offshore Kenya, in March 2011.
The Company concluded negotiations with the Government of the Republic of Kenya by executing heads of agreement ("HoA") which define the terms for Block L15, with Dominion serving as operator with a 100% working interest.
The award of L15 is subject only to the signature of a Production Sharing Contract ("PSC") by Dominion and Kenya's Ministry of Energy; currently scheduled to take place in the coming weeks in Nairobi.
With Block L15 now added to its portfolio of exploration assets in offshore East Africa, Dominion holds a leading exploration portfolio in the deepwater East African margin by now operating 3 blocks in Tanzania and Kenya. The directors anticipate that the expanded, combined portfolio may gain even more industry interest going forward. The Company can now adopt a partnering strategy for the assets in terms of moving toward the drilling of this expanded portfolio.
Block L15 lies immediately to the north of Block L8, where the reportedly 1 billion barrel Mbawa prospect shall likely be drilled in mid 2012. Dominion's new Block is on the Davy-Walu structural trend, as is Block L9. The only well in Block L15 is Kofia-1, which was drilled by Union Oil in 1985 and encountered good oil shows in the Palaeogene and Upper Cretaceous intervals. Planned drilling by other operators along the Davy-Walu trend over the next 12 months may serve to de-risk the prospectivity in both L9 and L15 before firm drilling commitments are made in either PSC.
Following signature, the Initial Exploration Period of the PSC will last for two years. During this time, a gross minimum work commitment of $2.85m inclusive of the acquisition of 250 square kilometres of 3D seismic data is required.
Following the Initial Exploration Period, there is an option to relinquish the PSC or commit to another two year exploration period with the obligation to drill one well in that period.
The terms and the commitments for L15 defined in the HoA compare very favorably to other countries in the region relative to the potential resource the block represents.
Andrew Cochran, Chief Executive of Dominion Petroleum, commented, "We are delighted to add Block L15 to Dominion's East Africa deepwater exploration portfolio, one of the most sought after addresses in the exploration industry these days. The region is seeing both growing attention from, and accelerated activity by, major players with Kenya now due for deepwater drilling within the next year following the last year's successes in Tanzania and Mozambique.
"Dominion's new award represents a material expansion of an already enviable deepwater East African portfolio. We can now focus our attentions on the business of exploring these blocks, realizing their true value and embarking on substantive discussions with potential partners to establish plans for drilling."
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