PA Resources has reached an agreement with EnQuest PLC to farm out 70 percent of the company’s offshore assets in the Republic of Tunisia. The farm-out includes the ownership interest together with the operatorship in the Didon concession and the Zarat permit, including the Zarat and Elyssa fields and additional exploration assets.
PA Resources retains upside potential in offshore Tunisia through its remaining 30 percent interest. Participating interests in the Zarat permit are subject to Government back-in rights.
By bringing in EnQuest, PA Resources secures the opportunity to realise the value of its resources held in the Zarat permit through development.
The transaction reduces PA Resources’ risk exposure to commitments and work programmes from an estimated $150 million down to $45 million, and the company’s share of a Zarat field development will to a large extent be funded through the agreement with EnQuest.
As part of the agreement, PA Resources will receive an upfront cash consideration of $23 million, payable upon completion of the Didon transaction. The company stands to receive additional contingent considerations of $93 million relating to a Zarat development. Additional consideration of up to $133 million is payable in relation to the potential developments in the Zarat and Elyssa fields if development cost of 2P reserves is $18 per boe or less, with the top end of the range of such additional consideration achievable if such development costs are $13 per boe or less and upon achievement of certain revenue targets. The maximum amount of consideration above the initial $23 million completion payment will not exceed $227 million.
The farm-out is structured as two separate transactions; one relating to the Didon concession expected to be completed during the second half of 2013 and one relating to the Zarat permit expected to be completed during the fourth quarter 2013.The effective date of the transaction is 1 January 2013.
The farm-out will reduce PA Resources’ total 2P reserves from 56 to 24 mmboe and Contingent Resources from 142 to 78mmboe. The transaction reduces PA Resources’ production from the Didon field by approximately 1,000boepd (net), from 1,400 boepd to 400 boepd, while offering near term growth potential through infill drilling and step out opportunities. The transaction will lead to a book loss of approximately SEK 110 million, which will be accounted for in the second quarter 2013.
Completion of the transaction is subject to a number of conditions precedent, including, in relation to the acquisition of an interest in the Zarat Permit, all necessary approvals by relevant authorities and government.
PA Resources retains its present interest in the onshore producing DST fields in Tunisia (Douleb, Semmama and Tamesmida) as well as its exploration acreage in the Jelma, Makthar and Jenein Centre licences.
