Muscat - DNO International ASA, the Middle East and Africa-focused Norwegian oil and gas company, announced on Wednesday that it has entered into a farm-in agreement with respect to Oman's onshore Block 36.
The company also announced that it has been selected by the Ministry of Oil and Minerals of Yemen as successful bidder for onshore Block 84.
A farm-in deal is an arrangement whereby one oil operator 'buys in' or acquires an interest in a lease or concession owned by another operator on which oil or gas has been discovered or is being produced. Often farm-ins are negotiated to assist the original owner with development costs and to secure for the buyer a source of crude or natural gas.
According to a notification posted on its website, DNO International said that the Block 36 farm-in agreement provides for the transfer to DNO Oman AS of a 75 per cent participating interest (100 per cent paying interest) from Allied Petroleum Exploration Inc. The company will assume operatorship and fund reprocessing of existing and acquisition of new 2D seismic data and drilling of two exploration wells.
DNO Yemen AS has been awarded a 59.5 per cent participating interest (70 per cent paying interest) and operatorship of Block 84, joining Turkey's Dogan Enerji Yatirimlari Sanayi ve Ticaret AS with a 25.5 per cent participating interest (30 per cent paying interest) and Yemen Oil and Gas Corp, a state company, with a 15 per cent participating interest. The partners will acquire new 3D seismic and drill two exploration wells during the first exploration period.
"Block 84 in Yemen and Block 36 in Oman expand our footprint in two core areas in which we have extensive subsurface knowledge and operating history," said Bijan Mossavar-Rahmani, DNO International's executive chairman. "And we are building up our pipeline of exploration prospects with a focus on materiality and early execution," he added.
Oman's Block 36 is located in the Rub al Khali basin and covers a surface area of more than 18,000sq km. Two exploration wells previously drilled in the block have confirmed the presence of source rock in the basal Silurian hot shale, an organic-rich shale that has sourced the majority of the oil and gas fields discovered in the Arabian Peninsula and North Africa.
Multiple stacked potential reservoir units have also been identified and mapped on the existing seismic data comprising 10,000km of 2D seismic data complemented by high-resolution gravity and aeromagnetic surveys. Technical work to date suggests potential lead sizes in excess of 100mn barrels, DNO International said.
The company, in its notification, added the completion of the Block 36 transfer is subject to satisfaction of conditions, including approval by Oman's Ministry of Oil and Gas. The award of Block 84 in Yemen is subject to customary government approvals and ratification of a production-sharing agreement.
© Muscat Daily 2013
