Cairn Acquires Interest in Chariot’s Block Offshore Mauritania

Cairn has entered into a farm in agreement with Chariot Oil & Gas  for a 35% non-operated interest in an exploration block offshore Mauritania in West Africa.

The block (C19), which is currently held by Chariot (90% and Operator) and the Mauritanian state company “SociétéMauritanienne des Hydrocarbures” (SMH) (10%), comprises 12,175 km2 in water depths ranging from shallow shelf to over 2000m. The block lies just to the north of existing discoveries in Mauritania and contains the Tertiary and Cretaceous deep water fan plays proven further south along the West African margin. The two wells previously drilled in the shallow water areas of the block, both contained reservoirs with oil shows and point to the oil migration potential from the south.

The most prospective part of the block is covered by a new 3,500km2 3D seismic survey recently acquired by Chariot and currently being processed. The seismic will be interpreted with the objective of identifying a high grade drillable prospect by the end of Q1 2014.

Under the terms of the farm in agreement, which is subject to Government approval, Cairn will pay Chariot approximately US$26 million for seismic and other back costs. Thereafter, exploration costs will be apportioned Cairn 38.89% (Working Interest (WI) 35%), Chariot 61.11% (WI 55%) and SMH 0% (WI 10%).

If, before the end of the first phase of the licence (15 June 2015), Cairn were to increase its interest to greater than 50% then Chariot will support Cairn’s application for operatorship of the block.

Simon Thomson, Chief Executive, Cairn Energy PLC said:

“The opportunity in Mauritania presents an attractive new country entry, building on our existing Atlantic Margin portfolio in Senegal and Morocco. By developing an increased strategic presence in the under-explored and highly prospective new plays in this region, we can generate both operational and geological synergies and fully apply our proven frontier exploration skills.”

Larry Bottomley, Chariot CEO commented:

“We are pleased to have agreed a partnership on C19 in Mauritania with Cairn, whose focus on exploration-led growth is aligned with Chariot’s objective of creating transformational value for stakeholders through the discovery of material accumulations of hydrocarbons.”

“This agreement also demonstrates Chariot’s ability to implement our strategy of identifying and accessing large equity positions in underexplored hydrocarbon provinces, adding value in the early stages of exploration and securing farm-out partners to validate our assets, diversify risk and provide funding to further develop our portfolio. Furthermore, this partnership will enable us to continue to expedite our exploration efforts offshore Mauritania, where we see significant prospectivity and we look forward to maturing our prospect selection for drilling.”

Mauritania, one of the world’s poorest countries, with iron or exports and fish produce representing major contributors to its economy, hopes to take advantage of its offshore reserves of oil and natural gas. The country is one of the newest African oil producers. First Mauritania’s oil started flowing in 2006, from the Chinguetti offshore field. The field, discovered by Australian Woodside in 2001, was later on sold to Malaysian oil and gas giant PETRONAS.