Sea Dragon Energy has signed a Farm- out Agreement with Dana Gas Egypt Ltd, to acquire a fifty (50%) percent participating interest in the Kom Ombo (Block-2) Concession, located approximately 1,000 km south of Cairo on the West Bank of the Nile River. The Kom Ombo (Block-2) Concession, covering approximately 11,446 sqkm, is held by Dana Gas, which is the successor company to Centurion Energy International Inc. who was originally awarded the Kom Ombo (Block-2) Concession.
The total consideration paid by Sea Dragon to DGE is $45million subject to working capital adjustments. This consideration is to be paid in full by April 30, 2010.
The acreage contains the Al-Baraka Development Lease, comprising the Al-Baraka oil field, which has a discovered, undeveloped oil accumulation of approximately 100 million barrels of Original Oil in Place as Discovered Resources in two productive zones, according to Sea Dragon’s internal estimates.
Sea Dragon’s acquisition of a participating interest in the Kom Ombo (Block-2) Concession is subject to the consent and approval of the responsible authority. Four wells were drilled in the field of which three wells are currently on production at approximately 850 barrels of oil per day (BOPD).
Approximately $20million shall be cost recoverable by Sea Dragon out of future production revenue. As owner of a 50% participating interest in the Kom Ombo (Block-2) Concession, Sea Dragon will be required to pay its 50% share of future expenditures and is entitled to receive a 50% share of all future production revenues and 50% of all cost recoveries as specified in the Concession Agreement. Under the terms of the Farmout Agreement, Sea Dragon and DGE will jointly operate the Kom Ombo (Block-2) Concession.