SK Innovation Acquires Interest in Foum Assaka Block (Morocco)
Fastnet has ,through its subsidiary Pathfinder, signed a farmout agreement with South Korean company SK Innovation for a 12.5 per cent paying interest share over four exploration licenses comprising the Foum Assaka offshore Contract Area in the Agadir Basin in Morocco.
Under the terms of the Farmout Agreement, SK Innovation will acquire a 12.5 per cent interest in the Foum Assaka Block and shall pay 100 per cent of Pathfinder’s 12.5 per cent share of the cost of the first exploration well subject to a maximum gross well cost of US$100 million.
In the event that the second well, following the initial exploration well, is not an appraisal well but a further exploration well then, at SK Innovation’s election to participate, SK Innovation shall pay 100 per cent of Pathfinder’s 12.5 per cent share of the cost of the second well subject to a maximum gross well cost of US$100 million.
If the gross costs in either of the two wells are less than US$100 million then, provided Fastnet and SK Innovation agree to re-drill the same prospect, SK Innovation shall carry Fastnet until such time as the cumulative gross cost for both wells reach US$100 million.
Under the Farmout Agreement, SK Innovation shall pay to Fastnet the sum of US$3,220,900, which represents a 25 per cent share of costs incurred by Pathfinder up until 1 October 2013. In addition, SK Innovation shall pay 25 per cent of actual costs incurred by Pathfinder from 1 October 2013 to 1 January 2014 and any pre-drill costs directly attributable to the FA-1 well being the first well drilled on the Eagle prospect. SK Innovation shall also pay 12.5 per cent of Pathfinder’s costs in relation to its participating interest during the period from 1st January 2014 until the issue of a Joint Ministerial Order approving the assignment of the 12.5 per cent participating interest from Pathfinder to SK Innovation (“Completion”).
Completion of the farm-out is subject to the customary closing conditions including:
· SK Innovation obtaining any required approvals from the government of the Republic of Korea;
· Moroccan Government approval;
· Waiver of existing pre-emption rights by the Foum Assaka joint venture partners; and
· Confirmation from the parties to the Joint Operating Agreement (“JOA”) approving the terms of the novation agreement in respect of the JOA and assignment of the interest in the Foum Assaka Block to SK Innovation.
Expected drilling timetable
Currently the operator, Kosmos, anticipates a late Q1 2014 spud date for a well on the Eagle Prospect to test all prospective reservoirs.
Background information on SK Group
SK Innovation (formerly known as SK Energy) is the energy and chemicals affiliate of SK Group. The SK Group is the third largest conglomerate in South Korea with over 70,000 employees who work from 113 offices worldwide. The group’s businesses include energy, chemicals, information, telecommunications, semiconductors, finance, and distribution.
Carol Law, Executive Director of Fastnet said:
“The farmout of half of our Interest in the Foum Assaka Block provides Fastnet with a very low cost opportunity to participate in the drilling of a high profile, potentially high reward well in what we view as one of the industry’s hottest new exploration areas. This transaction validates Fastnet’s strategic decision to conduct a separate competitive farmout process for its equity interest in this highly regarded exploration block in the Agadir Basin, as exemplified by BP’s farm-in to the Kosmos equity. Fastnet has secured excellent commercial terms and has ensured that the carried equity interest has running room in the event of a follow up appraisal or exploration well being drilled.”
Paul Griffiths, Managing Director of Fastnet said:
“The Farmout Agreement significantly strengthens Fastnet’s balance sheet and ensures that our exciting offshore and onshore drilling programme in Morocco in H1 2014 can be optimally executed in a manner consistent with the Company’s stated strategy of returning value to shareholders in the event of early drilling success.”
Press Release, December 18, 2013