Pancontinental Oil & Gas NL has advised that the Government of Kenya has granted a 12-month extension to the current Initial Exploration Period of the L10B offshore licence.
Following the current Period (as extended), the joint venture can then elect to move into the First Additional Exploration Period of the licence.
Pancontinental considers this to be extremely favourable because it gives the joint venture partners more time to assess the impact of the Sunbird-1 discovery in the adjacent L10A area (PCL 18.75%) and its implications for possible future drilling in L10B. Pancontinental also intends to use the extended Period to secure a farm-in agreement for any future L10B drilling.
L10B has a number of large prospects and leads identified using 3D seismic and these are being examined as potential exploration drilling targets.
Pancontinental has also advised that it has notified BG Group, the London-listed FTSE-100 company which operates the licence, and the other joint venture participants, that it will increase its stake in L10B from 15 percent to 20 percent.
The Company has increased its stake in L10B by taking up its pro-rata share of the interest held by Premier Oil, which has elected to withdraw. The changes in interests are subject to the approval of the Ministry of Energy and Petroleum of Kenya and such approval is not expected to be withheld.
It will increase its stake prior to 15 June 2014, subject to Ministry Approval.
Pancontinental believes that the significant prospectivity of L10B and the opportunity to increase its interest with other partners in L10B at no cost, as well as the prospectivity of adjacent area L10A, means it is well-placed to farm-out a portion of its interest in both licences on attractive terms and in a suitable time-frame under the 12-month extension.
L10A Sunbird -1
Pancontinental has advised that the analysis of the Sunbird-1 discovery results in area L10A (PCL 18.75%) is ongoing. L10A is located immediately to the north of L10B.
Following Pancontinental’s ASX release on 14 April 2014 titled “Sunbird-1 intersects hydrocarbon zone offshore Kenya”, Pancontinental notes that L10A operator, BG Group, has announced that oil, as well as gas, has been discovered in Sunbird-1.
The characteristics of the oil and gas discovery continue to be analysed and will be announced when a complete and integrated analysis has been made available to the joint venture by the operator.