Perth-based oil and gas explorer Pura Vida Energy is set to acquire a 50 per cent interest in an oil block off Madagascar.
Perth-based oil and gas junior Pura Vida Energy says today’s completion of a farm-out agreement covering its assets off the coast of Morocco is a company-changing event that removes the risk of exploring the project.
The agreement, which was initially announced in January and is with a subsidiary of global giant Freeport McRoran Oil & Gas, leaves Pura Vida fully funded for a two well drilling program off the Moroccan coast.
The company said it had received a cash payment of $US15 million from Freeport, with the drilling program to be capped at $US215 million and funded by Freeport.
Pura Vida also said all outstanding government approvals had been received for the farm-out of its Mazagan permit, completing the terms of the agreement.
Managing director Damon Neaves told Business News the arrangement was a company-changing move.
“This company was founded on getting to this day, where we would be free-carried on a high impact exploration program in Morocco, and that’s what we’ve delivered today,” Mr Neaves said.
“It really was two years in the making and it is a significant achievement.
“For a junior to be drilling on this scale is really an exceptional outcome, and at no risk it really is pleasing for us and our shareholders.”
Also today, Pura Vida said it was set to acquire a 50 per cent interest in an oil block off Madagascar.
Pura Vida said it had entered into an agreement with a subsidiary of London-based Sterling Energy to farm-in to the Ambilobe block, a 17,650 square kilometre acreage off the coast of the island republic.
The agreement is conditional upon approval from the government of Madagascar.
Pura Vida will reimburse $US1.25 million in back costs to Sterling and fund the acquisition and processing of seismic data up to a maximum cost of $US15 million.
Pura Vida said its depth of knowledge relating to salt basin exploration made the block a natural addition to its offshore assets in Morocco and Gabon.
“The strategy there is very similar to Morocco,” Mr Neaves said.
“We have taken a 50 per cent interest, we’ve farmed in with a UK company in Sterling Energy.
“There are significant amounts of oil onshore at Madagascar, and we see big potential offshore.
“That whole east African region has delivered huge successes in both oil and gas in recent years.”
Mr Neaves said 2D seismic data targeting was underway at the Ambilobe block, with costs expected to come in around $US2 million.
“The strategy that we are pursuing is about diversifying and de-risking through diversification and also de-risking through securing industry funding, rather than putting shareholder dollars at risk," he said.
“The deal with Freeport is extraordinary in that it effectively gives us $US230 million in industry funding, with $US15 million in cash and up to $US215 million going into the project.
“With Madagascar, in terms of our asset portfolio now, we are starting to get a good spread of opportunities across different regions, we’ve got Morocco in North Africa, Gabon in West Africa and Madagascar in East Africa.
So we really are building a portfolio of some scale and diversity now.
Pura Vida’s shares closed trade today down 2.7 per cent, finishing at 71.5 cents.