It’s Pay Day For Africa Oil Corp - Africa’s premier report on the oil, gas and energy landscape.

It’s Pay Day For Africa Oil Corp

Africa Oil Corp is reaping the benefit of moving early into East Africa and buying a slew of blocks off the governments of Kenya, Ethiopia and Somalia.Nowthe company is experiencing a significant pay day. Here are some of the transactions that indicate that the “landlord” is taking his “rent”:

Kenya: Tullow Shells Out $759,000
Tullow has paid $759,000 to Africa Oil Corporation in consideration of past costs to acquire an additional 15% interest in Block 12A in Kenya. The farm in transaction has been concluded and has received Kenya government approval. Tullow will also fund Africa Oil’s working interest share of costs related to the acquisition of 520 kilometers of 2D seismic until an expenditure cap of $3.1 million net to Africa Oil has been met, following which Africa Oil will be responsible for its working interest share of seismic acquisition costs. Tullow previously acquired a50%interest in, and operatorship of, Block 12A in a transaction that was completed in February 2011.

Kenya: Marathon To Pay $35Million “Sign On Fees” For Kenyan Blocks
Marathon Oil will pay Africa Oil Corporation an entry payment of $35million in consideration for the assignment of interests in Blocks 9 and 12A onshore Kenya. The payment includes prior expenditures incurred by Africa Oil Corp on the leases. Marathon has also agreed to fund Africa Oil’s working interest share of future joint venture expenditures anticipated to be spent over the next three years up to a maximum of $43.5million.

The two companies signed a definitive farmout agreement with Marathon Oil Corporation whereby Marathon Oil will acquire the rights to obtain a 50% interest in Block 9 and a 15% interest in Block 12A. Africa Oil will maintain operatorship in Block 9, but Marathon Oil has the right to assume operatorship if a commercial discovery is made. In addition, Africa Oil and Marathon Oil have agreed to jointly pursue exploration activities on an additional exploration area in Ethiopia. The above transactions are all subject to host country Government approvals.

The resulting interest in the Kenyan exploration blocks upon approvals and subsequent closing of the Marathon Oil farmout agreement, together with the completion of a separate farmout transaction with TullowOil plc (described below)will be as follows:

Block 9 (Kenya):  Africa Oil 50% – Marathon Oil 50%
Block 12A (Kenya):  Africa Oil 20% – Marathon Oil 15% – Tullow 65%

Net Working Interests are subject to backing rights or carried working interests, if any, of the respective governments or national oil companies of the host governments.

Ethiopia: And New Age Will Pay $1.5MM
NewAge (Africa Global Energy) Limited will be paying Africa Oil Corporation the sum of $1.5 million(in consideration of past costs) for acquiring an additional 25% interest in Africa Oil’s Blocks 7 & 8 in Ethiopia. The two companies entered into a definitive agreement with whereby New Age will acquire, the said interest, together with operatorship of Blocks 7 & 8 and the Adigala Area. Following the completion of the New Age farmout transaction, the resulting interest in Blocks 7 & 8 will be as follows:

Blocks 7 & 8:  Africa Oil 30%  – New Age 40% – Afren plc 30%

The transfer of operatorship will occur upon completion of the acquisition of the Blocks 7 & 8 interest by New Age. This transaction is also subject to host government approvals, the waiver of preemption rights by Africa Oil’s partners and the satisfaction of any applicable regulatory requirements.

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