September 10, 2008
Circle Oil Signs Farm-Out Agreement With Petroholland in Northern Namibia
Circle Oil, an oil and gas exploration and development company, has signed a farm-out agreement on its Ovambo Basin license in northern Namibia with Petroholland, a Dubai holding company.
The license covers an area of over 70,000sqkm immediately to the south of the Angola Namibia border. Under the terms of the agreement, Petroholland will acquire a 70% undivided interest in the license with Circle retaining a 20% interest and NAMCOR, the Namibian State oil company, holding a 10% share.In consideration for the 70% interest in the license, Petroholland has agreed to pay Circle $15 million in cash and cover all of the costs attributable to Circle's 20% share of exploration and development expenditure through to production.
The Namibian minister for energy and mines, Erkki Nghimtina, has already approved the assignment of the 70% share in the license to Petroholland and has agreed that Petroholland will become the operator of the license. NAMCOR has elected not to exercise its pre-emption right under provisions of clause 12 of the current joint operating agreement.
Petroholland has engaged the services of Halliburton consultants to provide the technical capability, personnel and resources to fulfill its obligations under the terms of the farm-out agreement and the joint operating agreement.
David Hough, CEO of Circle, said: "This is a good deal for Circle providing us with further cash for investment in our work program. It also provides us with a free carry on the Ovambo Basin license, and any subsequent upside."