Marathon Oil (MRO) Enters Farmout Agreement w/ Africa Oil for Two Onshore Blocks; Will Pay ~$78.5M
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Marathon Oil Corporation (NYSE: MRO) announced today that it has entered into a farmout agreement with Africa Oil Corp. to acquire a position in two onshore exploration blocks amounting to more than 11 million gross acres in northwest Kenya. The transaction includes a 50 percent working interest (WI) in Block 9 and a 15 percent WI in Block 12A. The companies expect to close the transaction, subject to completion of the necessary Kenyan government approvals, in the third quarter of 2012, with an effective date of June 30, 2012.
Kenya's Block 9 is approximately 7.5 million gross acres (30,220 square kilometers) along a prospective Cretaceous Rift Trend. Africa Oil will operate the exploration phase, and Marathon Oil has the right to assume the role of operator if a commercial discovery is made.
Block 12A is approximately 3.8 million gross acres (15,389 square kilometers) and is contiguous with Block 10BB to the north, which contains the recently announced Ngamia-1 oil discovery. Tullow Oil is the operator of Block 12A with a 65 percent WI and Africa Oil retains a 20 percent WI.
The companies expect to drill an exploration well on Block 9 in the second quarter of 2013. On Block 12A, 2-D seismic acquisition is expected to commence in the third quarter of 2012.
In addition, Marathon Oil and Africa Oil have agreed to jointly pursue exploration activities on an additional exploration area in Ethiopia, subject to host country Government approvals.
In consideration for the assignment of these interests, Marathon Oil will pay Africa Oil an entry payment of $35 million which includes prior expenditures, and has agreed to fund Africa Oil's working interest share of joint venture expenditures in these blocks anticipated to be spent over the next three years up to a maximum of $43.5 million.
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Kenya's Block 9 is approximately 7.5 million gross acres (30,220 square kilometers) along a prospective Cretaceous Rift Trend. Africa Oil will operate the exploration phase, and Marathon Oil has the right to assume the role of operator if a commercial discovery is made.
Block 12A is approximately 3.8 million gross acres (15,389 square kilometers) and is contiguous with Block 10BB to the north, which contains the recently announced Ngamia-1 oil discovery. Tullow Oil is the operator of Block 12A with a 65 percent WI and Africa Oil retains a 20 percent WI.
The companies expect to drill an exploration well on Block 9 in the second quarter of 2013. On Block 12A, 2-D seismic acquisition is expected to commence in the third quarter of 2012.
In addition, Marathon Oil and Africa Oil have agreed to jointly pursue exploration activities on an additional exploration area in Ethiopia, subject to host country Government approvals.
In consideration for the assignment of these interests, Marathon Oil will pay Africa Oil an entry payment of $35 million which includes prior expenditures, and has agreed to fund Africa Oil's working interest share of joint venture expenditures in these blocks anticipated to be spent over the next three years up to a maximum of $43.5 million.
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