ARA Petroleum Tanzania an affiliate of Eclipse Investments, the largest shareholder in Zubair Corporation will take over operatorship of the Ruvuma PSA after Ndovu Resources signed a binding farm-out agreement with the Zubair Corporation.
According to Aminex which wholly-owns subsidiary Ndovu Resources following the farm-out it is intended that the Farm-Out will accelerate the development of the Ntorya project, including carrying Aminex through to a minimum gross production rate of 40 MMcf/d and be self-funded through a full field development project.
Further details from Aminex indicate that the yet to be formed APT will become operator with a 50% working interest in the Ruvuma PSA and will conduct a minimum work programme including
- Drill, complete, and test Chikumbi-1 (formally Ntorya-3) as soon as reasonably practicable
- Acquire, process and interpret 3D seismic over a minimum of 200 km2 within the Ntorya area, which is understood to be the first time 3D seismic has been acquired onshore Tanzania
- Establish an Early Production System to achieve accelerated first gas to a minimum gross rate of 40 MMcf/d (equivalent to approx. 6,700 bbls/d)
APT will also pay Aminex $5 million cash in two tranches, $3 million payable on closing and the remaining $2 million 180 days later and fully carry Aminex for its share of costs up to $35 million in respect of its remaining 25% interest (post-transaction) (the ‘Aminex Carry’), which implies a potential expenditure during the carry period of up to $105 million for the aggregate 75% working interest held by APT and Aminex
In the event that the minimum production target of 40 MMcf/d is achieved prior to Aminex’s 25% interest having been carried for the full $35 million the agreement shows that APT will assign one quarter of its share of profit gas to pay the unspent Carry amount until the full $35 million is realized by Aminex.
Aminex adds it believes that the Farm-Out will accelerate development of the Company’s principal asset and substantially reduce project and other risks.
The Company will retain a 25% interest in the Ruvuma PSA which includes Ntorya’s 1.87 TCF (311 million boe) Pmean gas initially in place (2017 RPS Energy Consultants report) and which is expected to be developed without the need for new funding by Aminex.
“With the Ntorya project carried to a minimum level of production it is now expected that the Company will be self-funded for further development. Aminex continues to develop its Kiliwani and Nyuni assets and is undertaking a review of other opportunities which will deliver robust shareholder returns,” says CEO of Aminex Jay Bhattacherjee.
“Today’s announcement emphasises our firm belief in the Aminex portfolio and in Tanzania, where the Zubair Corporation group of companies has existing business interests and enjoys strong relationships and an excellent reputation. We look forward to continuing to work with Aminex and the Tanzanian government to help bring forward development of this nationally important asset,” adds CEO of ARA Petroleum Sultan Al-Ghaith.
A circular will be posted to Aminex shareholders to convene an extraordinary general meeting which will be held in due course to approve the Farm-Out. The Farm-Out is also conditional upon Tanzanian government and other approvals. The Farm-Out Agreement is expected to be completed prior to 30 November 2018.
ARA Petroleum was established in Oman by the Zubair Corporation in order to enter the Exploration and Production arena. ARA Petroleum seeks to actively partner in developing oil & gas resources in Oman as well as abroad. ARA Petroleum will actively seek investment opportunities in the oil and gas sector by farming in to suitable assets.