zoomAfrican Petroleum Senegal operations

African Petroleum said it has signed a non-binding heads of terms and a binding exclusivity agreement with an undisclosed oil and gas company said to have a strong track record in offshore deep-water drilling.

The deals provide a framework for the incoming third party to secure a 70 percent operated interest in the African Petroleum’s SOSP production sharing contract (PSC) in Senegal and the A1 and A4 licences in The Gambia.

The heads of terms propose that the incoming party will pay up to USD 8.5 million to African Petroleum, fund 100 percent of at least two deep water offshore wells at a gross cost of up to USD 35 million per well, fund 100 percent of a 3D seismic acquisition, fund 100 percent of pre-stack depth migration (PSDM) processing/reprocessing, and potentially fund 100 percent and 85 percent respectively of a further two wells at a gross cost of up to USD 35 million per well.

African Petroleum’s chief executive officer, Jens Pace, said: “This is a significant development for the company with a well funded credible partner with strong deep-water drilling experience.

“Whilst final farm-in agreements are subject to completion and the successful outcome of negotiations with the governments in Senegal and The Gambia, we are confident that the proposed partner’s reputation, strong balance sheet and appetite to explore the potential of these exciting licences with the drill-bit, will greatly increase our ability to conclude the discussions with an outcome that benefits all parties.

“Our objective is to ensure that African Petroleum’s shareholders retain significant exposure to several firm and contingent wells, at no cash cost to the company, in one of the most exciting hydrocarbon basins in the world.”