Cairn Energy to farm-in to Foum Draa Block

RNS Number : 7980K

San Leon Energy PLC

28 August 2012

 



28 August 2012

San Leon Energy Plc

("San Leon" or the "Company")

Cairn Energy to farm-in to Foum Draa Block offshore Morocco on attractive terms

Key Highlights

·      Successful farm-out to Cairn of our second Offshore Morocco block on attractive terms

·      Reduces financial exposure but keeps interest at a level which still offers attractive upside

·      Targeting a first Foum Draa exploration well in 2013

·      Concludes the farm-out processes on our two Offshore Morocco blocks

San Leon is pleased to announce that it has signed a farm-in agreement with Cairn Energy Plc ("Cairn") under which Cairn has committed to pay a promoted share of the costs associated with drilling an exploration well in the Foum Draa Block, offshore Morocco ("Foum Draa" or "Block").

Under the agreement, Cairn will acquire a 50% operated equity interest in Foum Draa, pro rata from each of San Leon, Serica Energy plc ("Serica") and Longreach Oil and Gas Ventures Limited ("Longreach") (together the "Partners").  In return, Cairn will pay its equity interest share of past costs, being US$1.5 million (US$850,000 net to San Leon) and pay the first US$60 million towards the drilling of the commitment exploration well. The agreement is subject to necessary Moroccan Authorities approvals.

Cairn has also committed to providing the bank guarantee required by the Moroccan Authorities to enter the First Extension Period.

Pre completion of the farm-in agreement, San Leon Energy held a 42.5% net operated interest in the block, Serica held 25% and Longreach held 7.5%. ONYHM, the National Bureau of Petroleum and Mines holds  a 25% interest, carried through exploration.

Post farm-in, Cairn will hold a 50% net operated interest, San Leon Energy will hold 14.17%, Serica will hold 8.33% and Longreach will hold 2.5%. ONYHM, the National Bureau of Petroleum and Mines will continue to hold 25%.

The Partners have already informed the Moroccan authorities of their intention to proceed into the First Extension Period, which contains a commitment to drill an exploration well.

Executive Chairman, Oisin Fanning commented:

"We are delighted to welcome Cairn Energy into this Block that contains very large mapped prospects and we are now targeting our first Foum Draa exploration well in 2013. This is deep water exploration and this deal reduces our financial exposure but keeps our interest at a level which still offers attractive upside for our shareholders.

"San Leon committed itself to carrying out extensive work offshore Morocco over the past two and a half years and this farm-in agreement concludes the farm-out of our two offshore blocks.

We also announced the successful farm-out of our offshore Sidi Moussa block to Genel Energy last week. Attracting partners like Cairn and Genel on the terms achieved is testament to the quality of work we have undertaken."

For further information contact:

San Leon Energy Plc	Tel: [phone]
Oisin Fanning, Executive Chairman
John Buggenhagen, Exploration Director
Macquarie Capital (Europe) Limited	Tel: [phone]
Paul Connolly
John Dwyer
Fox Davies Capital	Tel: [phone]
Daniel Fox-Davies
Richard Hail
FirstEnergy Capital LLP	Tel: [phone]
Hugh R. Sanderson
David Van Erp
Westhouse Securities (Nominated Advisor) Richard Johnson	Tel: [phone]
Antonio Bossi
College Hill Associates	Tel: [phone]
Nick Elwes
Alexandra Roper

www.sanleonenergy.com

 

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