{"id":5071,"date":"2016-08-24T10:13:47","date_gmt":"2016-08-24T10:13:47","guid":{"rendered":"http:\/\/www.oilnewskenya.com\/?p=5071"},"modified":"2017-01-24T19:52:09","modified_gmt":"2017-01-24T19:52:09","slug":"tarach-1-well-in-kenyas-block-11a-cost-cepsa-erhc-over-25m","status":"publish","type":"post","link":"https:\/\/www.oilnewskenya.com\/index.php\/tarach-1-well-in-kenyas-block-11a-cost-cepsa-erhc-over-25m\/","title":{"rendered":"Tarach-1 well in Kenya\u2019s Block 11A cost CEPSA, ERHC over $25M"},"content":{"rendered":"

The Tarach-1 well which commenced drilling on April 14th<\/sup> 2016 in Block 11A could have cost the two joint venture partners Compania Espanola de Petroleos (CEPSA) operator* and ERHC over $25 million going by exploration and drilling expenses filed by ERHC to the United States Securities And Exchange Commission.<\/p>\n

ERHC which completed a farm-out to CEPSA in February 2014 says capitalized drilling costs in Block 11A hit $2.27 million while exploration expenses during the three months to June were up to $2.275 million.<\/p>\n

Going by the farm-out<\/a> agreement the carry obligation was not to exceed twenty million five hundred thousand United States Dollars (US$20,500,000) after which the farmor would be responsible for 45% of any further exploration costs.<\/p>\n

Going by the exploration costs this would mean that this amount would have been exhausted if the well cost more than $18 million. Calculating by the $2.27 million that ERHC paid in drilling costs this would mean that the expenses exceeded the carry by about $5 million driving the total costs to over $25 million.<\/p>\n

Whereas the results of the well are yet to be announced a source told OilNews Kenya in June that the results were \u2018disappointing<\/a>\u2019 meaning that CEPSA (farmee) could opt out with the agreement having focused on the Spanish explorer\u2019s continued participation where \u2018significant hydrocarbons\u2019 were encountered.<\/p>\n

\u201cProvided that the Farmee decides at its own discretion, following its analysis and evaluation of the Exploratory Well or the 3D Acquisition, that sufficient hydrocarbons exist to justify:<\/p>\n

(a) the declaration of a commercial project pursuant to the Contract; and<\/p>\n

(b) the drilling of an appraisal well (the \u201cAppraisal Well\u201d),<\/p>\n

The Farmee shall pay one hundred percent (100%) of the costs, expenses, expenditure and liabilities incurred by the Parties for such Appraisal Well,\u201d reads part of the agreement.<\/p>\n

This could throw ERHC back to the market to the market to initiate another farm-out efforts that have ongoing in partnership with Deloitte as advisor.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Tarach-1 well which commenced drilling on April 14th 2016 in Block 11A could have cost the two joint venture partners Compania Espanola de Petroleos (CEPSA) operator* and ERHC over … Read More<\/a><\/p>\n","protected":false},"author":24,"featured_media":4579,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[11],"tags":[5010,261,431,495,2845,5011,796,5012,870,4078,5013],"class_list":["post-5071","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-top-news","tag-appraisal-well","tag-block-11a","tag-cepsa","tag-compania-espanola-de-petroleos-cepsa","tag-deloitte-corporate-finance","tag-drilling-expenses","tag-erhc","tag-exploration-expenses","tag-farm-out","tag-tarach-1-well","tag-united-states-securities-and-exchange-commission","entry"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2016\/04\/Tarach-1-well-rig.png?fit=551%2C412&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p5JWkQ-1jN","jetpack-related-posts":[{"id":5116,"url":"https:\/\/www.oilnewskenya.com\/index.php\/cepsa-erhc-hit-dry-well-at-kenyas-block-11a-tarach-1\/","url_meta":{"origin":5071,"position":0},"title":"CEPSA, ERHC Hit Dry Well at Kenya\u2019s Block 11A Tarach-1","author":"","date":"September 1, 2016","format":false,"excerpt":"Earlier reports by OilNews Kenya that the Tarach-1 well in Block 11A was disappointing have now been confirmed with the commissioner for petroleum Martin Heya at the Ministry of Energy and Petroleum saying\u00a0the Spanish explorer Compania Espanola de Petroleos\u00a0 (CEPSA)was a dry well. According to the commissioner the block operator\u2026","rel":"","context":"In "Top News"","block_context":{"text":"Top News","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/top-news\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2016\/04\/Tarach-1-well-rig.png?fit=551%2C412&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2016\/04\/Tarach-1-well-rig.png?fit=551%2C412&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2016\/04\/Tarach-1-well-rig.png?fit=551%2C412&ssl=1&resize=525%2C300 1.5x"},"classes":[]},{"id":2846,"url":"https:\/\/www.oilnewskenya.com\/index.php\/cepsa-erhc-identify-drilling-location-kenyas-block-11a\/","url_meta":{"origin":5071,"position":1},"title":"CEPSA, ERHC identify drilling location in Kenya\u2019s Block 11A","author":"","date":"April 23, 2015","format":false,"excerpt":"Spanish exploration company CEPSA and Houston based explorer ERHC have said that its exploration team has identified the Tarach-1 prospect as the drilling location for the first exploration well set to be drilled in March 2016 in an announcement by ERHC. This decision was based on interpretation of 1,086.6 kilometers\u2026","rel":"","context":"In "Top News"","block_context":{"text":"Top News","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/top-news\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/07\/kenya-block-11a-2.jpg?fit=300%2C258&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":6395,"url":"https:\/\/www.oilnewskenya.com\/index.php\/cepsa-withdraws-kenyas-block-11a\/","url_meta":{"origin":5071,"position":2},"title":"CEPSA Withdraws From Kenya\u2019s Block 11A","author":"","date":"October 11, 2017","format":false,"excerpt":"CEPSA Kenya Limited, an affiliate of Compa\u00f1\u00eda Espa\u00f1ola de Petr\u00f3leos, S.A.U. has withdrawn from Block 11A months after the unsuccessful drilling of Tarach 1 well OilNews Kenya has learnt. Confirming the exit principal secretary in the Ministry of Energy and Petroleum Andrew Kamau told OilNews Kenya that the Spanish explorer\u2026","rel":"","context":"In "Top News"","block_context":{"text":"Top News","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/top-news\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/07\/kenya-block-11a-2.jpg?fit=300%2C258&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":5809,"url":"https:\/\/www.oilnewskenya.com\/index.php\/tarach-1-well-now-classified-as-dry-cepsa\/","url_meta":{"origin":5071,"position":3},"title":"Tarach 1 Well Now classified as Dry – CEPSA","author":"","date":"March 27, 2017","format":false,"excerpt":"The Tarach 1 well drilled in April 2016 was dry as earlier reported by OilNews Kenya according to the latest SEC filing by joint venture partner ERHC. \u201cOperator analysis of the results if the Tarach-1 well shows that it did not encounter any reservoirs. The operator has therefore classified Tarach-1\u2026","rel":"","context":"In "New Discoveries"","block_context":{"text":"New Discoveries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/new-discoveries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/07\/kenya-block-11a-2.jpg?fit=300%2C258&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":4360,"url":"https:\/\/www.oilnewskenya.com\/index.php\/tarach-1-well-in-kenyas-block-11a-drilling-date-on-schedule-as-rig-mobilization-commences\/","url_meta":{"origin":5071,"position":4},"title":"Tarach 1 well in Kenya\u2019s Block 11A Drilling Date on schedule as Rig Mobilization Commences","author":"","date":"February 17, 2016","format":false,"excerpt":"The drilling rig for the Tarach 1 well in Block 11A has being mobilized to the drill site where concreting work and installation of conductors have already been completed as the JV partners Compa\u00f1\u00eda Espa\u00f1ola de Petr\u00f3leos, S.A.U.\u00a0 (CEPSA) operator* and ERHC work relentlessly toward a spud date near the\u2026","rel":"","context":"In \"Block 11A\"","block_context":{"text":"Block 11A","link":"https:\/\/www.oilnewskenya.com\/index.php\/tag\/block-11a\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/07\/kenya-block-11a-2.jpg?fit=300%2C258&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":3829,"url":"https:\/\/www.oilnewskenya.com\/index.php\/erhc-still-hopeful-first-well-kenyas-block-11a-march-2016\/","url_meta":{"origin":5071,"position":5},"title":"ERHC still hopeful of first well in Kenya\u2019s Block 11A by March 2016","author":"","date":"September 17, 2015","format":false,"excerpt":"Kenya\u2019s Block 11A joint venture partner ERHC says the contracting parties plan to spud the first well at the Tarach-1 prospect by the end of the first quarter of 2016 in its latest update. 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