Dragon set for controlling stake in Tunisia permit

Dragon Oil has signed a farm-in agreement with Cooper Energy for the Bargou exploration permit offshore Tunisia.

Offshore staff

SUBIACO, Australia – Dragon Oil has signed a farm-in agreement with Cooper Energy for the Bargou exploration permit offshore Tunisia.

The concession is in the Gulf of Hammamet in the Mediterranean Sea, and covers an area of 4,616 sq km (1,782 sq mi) with various prospects and leads in water depths ranging from 50-100 m (164-328 ft).

Dragon Oil will earn a 55% interest by paying 75% of the cost of next year’s planned Hammamet West-3 well in the Hammamet West Oil field, up to a cost cap of $26.6 million (on a 100% basis).

If the well costs exceed this figure, the excess will be shared among the joint venture partners according to their interests.

Drilling will initially involve a pilot hole followed by a horizontal section to intersect the fractures within the Abiod formation, thereby increasing the reservoir’s flow potential.

Hammamet West is in the northern part of the permit and covers 205 sq km (79 sq mi) in water depths of roughly 50 m. During 2009-10, 3D seismic was acquired over the field.

Assuming Tunisian government/partner approvals, the Bargou Joint Venture will comprise Dragon Oil (55%), Cooper Energy (30%) and Jacka Resources (15%).

If Hammamet West-3 is successful and the partners commit to development of the field, Dragon Oil will assume operatorship of permit, again subject to confirmation from the Government.

In that case, Dragon Oil would carry Cooper Energy for around $5 million to compensate it for past pro rata costs. Thereafter, all parties would pay their share for any development costs.

Dr. Abdul Jaleel Al Khalifa, CEO of Dragon Oil, said that the agreement, in addition to the planned well, “offers exploration upsides through a number of additional independent prospects and leads.

“This farm-in is part of our plan to build a portfolio of development and exploration opportunities in order to grow the Group into a multi-asset company. We believe our experience offshore Turkmenistan with complex and challenging reservoirs will be useful in better understanding, appraising and developing the Hammamet West Oil Field.”

10/10/2011

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