LONDON --Petrobras Oil and Gas has agreed to farm into exploration block 2714A offshore southern Namibia.
The block is one of eight operated off Namibia by Chariot Oil & Gas, and covers an area of 5,481 sq km (2,116 sq mi) in the southern Orange basin.
Recently the company acquired 1,500 sq km (579 sq mi) of 3D seismic over this and neighboring block 2714B. Reprocessing and interpretation of the data is under way.
Under the terms of the farm-out agreement, which first has to be approved by Namibia's Ministry of Mines and Energy, Petrobras will pay Chariot $16.04 million cash – this includes reimbursement costs for the recent seismic program.
In the event of a commercial discovery, Chariot will also be paid a production bonus equivalent to 4.75% (after royalties) of Petrobras' share of production - up to either 2 MMboe or a value of $118 million, whichever occurs first.
Petrobras has also agreed to pay half the cost of a further 1,500 sq km (579 sq mi) of 3D seismic due to be acquired over 2714A later this year.
Chariot's subsidiary Enigma Oil & Gas Exploration will remain as operator of the block until the end of the initial exploration period on Aug. 31, 2010. Petrobras has the option to become operator thereafter.