VAALCO Energy has entered the subsequent exploration phase (SEP) on Block 5 offshore Angola with its working interest partner, Sonangol P&P, as provided for in the production-sharing agreement signed in 2006 with Angola, a news release said.
The SEP extends the exploration license for an additional three-year period, moving the new expiry date for exploration activities to Nov. 30, 2017. The SEP requires the company and its partner to acquire a 3-D seismic program covering 600 sq km (232 sq miles) and to drill two additional exploration wells. The seismic obligation has been satisfied with a seismic program already completed covering 1,058 sq km (408 sq miles) over the outboard portion of the block, according to the release.
By entering the SEP, the company is now required to drill a total of four exploration wells during the exploration extension period. The four-well obligation includes the two-well commitment under the primary exploration period that carries over to the SEP period. A $10 million assessment ($5 million net to VAALCO) applies to each of the four commitment exploration wells, if any, that remain undrilled at the end of the exploration period in 2017.
The decision to enter the SEP was made in part to remove uncertainty that the primary term of the exploration license would be extended by Angola before the Nov. 30, 2014, expiration date, VAALCO said in the release.
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