Mediterranean Oil strikes oil exploration deal with Genel Energy

Mediterranean Oil & Gas Plc has announced that it has signed two key contracts with Genel Energy Plc that enable Genel's acquisition of a 75% working interest in MOG's wholly owned subsidiary, Phoenicia Energy Company Limited.

This follows the government decision to grant a one year extension, to January 2014, of the first exploration phase of the Production Sharing Contract for Malta Offshore Area 4.

The Share Sale Agreement will result in Genel acquiring 75% of the issued share capital of PECL on completion of the transaction.

The US$10 million deal will grant Genel a 100% carry on the first exploration well and a 100% carry on the second exploration well up to a US$30 million gross expenditure.

Should the costs of the second well exceed US$30 million, Genel will provide a financing arrangement to fund MOG's 25% share of any additional expenditure.

MOG will remain the operator through an Operations Service Agreement with PECL until the completion of the first exploration well, at which time Genel can elect to become the operator.

The deal is expected to be concluded by early 2013.

The Chief Executive of Mediterranean Oil and Gas, Bill Higgs said: "The signing of these two key contracts cements the relationship between MOG and Genel for the exploration of Area 4 in Malta and delivers on the Company's key objectives regarding its Malta licence."

He added that plans for the start of drilling of the first exploration well are progressing well that the first Eocene Prospect test  will be carried out with the drill bit by the end of 2013.

"We intend to start awarding drilling related contracts early in the New Year, including contracting of a drilling rig for the operations. We are excited to be leading this new phase of exploration activity offshore Malta," Higgs said.

Mediterranean Oil and Gas has an exploration licence for Area 4 to the south of Malta in the zone where the sea borders with Libya as was delineated by the International Court of Justice in 1985.

According to the company's preliminary studies based on seismic data the area may contain anything between 130 million and 200 million barrels of oil.