16th Jan 2014 10:32
LONDON (Alliance News) - Dragon Oil PLC Thursday said it has signed an agreement to acquire an initial 40% holding in a Philippines block from Nido Petroleum Philippines Ltd.
The oil and gas exploration, development and production company said the deal will be completed in two stages. During the first of which, Dragon would acquire a 40% interest in the Service Contract 63 site in the Palawan Basin of the Philippines.
After this, Nido will attempt to acquire an additional 10% interest in the site from the Philippine National Oil Company Exploration Corporation, subject to certain conditions.
Under the terms of the agreement, Dragon Oil will pay USD2.2 million plus certain costs of drilling to Nido. The costs to be paid to Nido are capped at USD25 million with well costs over and above this level shared by the parties in proportion to their participating interest.
Following this process, Dragon will hold a 40% interest, while Nido will hold a 20% interest and PNOC-EC will hold a 40% interest.
Dragon Oil has the option to acquire a further 10% participating interest in the site from PNOC-EC on the same terms and conditions agreed between Nido and Dragon Oil. This would raise Dragon Oil's stake to 50% and lower PNOC-EC's stake to 30%.
The SC63 site covers an area of 10,560 kilometres squared and is currently carrying out an exploration programme on the Baragatan prospect at the site.
Following drilling of the Baragatan-1 well, Dragon Oil will have the right to become operator of the service contract.
Dragon Oil shares were down 0.1% to 589.50 pence Thursday.
By Tom McIvor; [email protected]; @TomMcIvor1
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
DGO.L