Canada's Groundstar Resources has signed a preliminary agreement with Aminex Petroleum Egypt to earn a 20% stake in the onshore West Esh El Mallaha block near the Red Sea coast, Egypt.
Under the agreement, Groundstar will pay 40% of the cost of the initial three year exploration work programme to a maximum of $9 million to earn its stake. This will include the drilling of three wells.
West Esh El Mallaha covers 1328 square kilometres and is located just north-west of a Lukoil-operated block that currently produces about 12,000 barrels of oil per day.
The block is covered by 2D and 3D seismic and a number of prospects and leads have already been identified in its south-east.
Following the transaction, partners in West Esh El Mallaha will be operator Aminex Petroleum Egypt (50%), Swiss-Invest Petroleum Group (30%) and Groundstar (20%).
Meanwhile, Aminex will reduce its stake in Aminex Petroleum Egypt to 12.5% as part of the acquisition of First Energy by Australia's Volant Petroleum and Hong Kong's Karl Thomson Group.
It added that its costs for the block would be carried through to first commercial production.
© Upstream 2006
