Jacka Resources signs another farmout deal with Sterling Energy in Somaliland

oil somaliland-cfiesler flickrJacka Resources Somaliland Limited (JRSL) has signed a second farmout agreement with Sterling Energy (East Africa) Limited for the Odewayne Block located onshore Somaliland

The Odewayne PSC covers Block SL6 and part of Blocks SL7 and SL10, comprising an area of 22,840 sq km.

Sterling Energy said that it will acquire JRSL’s remaining 15 per cent participating interest in the PSC for a total cash consideration of US$12mn. Somaliland has already approved the transaction and the company expects completion under the second agreement within the next week.

In November 2013, Jacka Resources had announced JRSL’s farmout of a 15 per cent participating interest in the Odewayne Block to Sterling Energy.

Under the terms of the second agreement, Sterling Energy will acquire an additional 15 per cent interest in the PSC from JRSL. The company is expected to pay JRSL US$2.4mn on the signing of the deal.

Jacka Resources will, however, retain an option to acquire a five per cent participating interest arising from its original farm-in agreement with Petrosoma Limited. The option can be exercised on the earlier of the proposal of a second well in the PSC or the parties entering into the fifth period of the PSC.

The PSC is currently in the third period (expiring November 2014) with an outstanding minimum work obligation of 500km of 2D seismic, the LSE-listed company said. The minimum work obligation during the fourth period of the PSC (expiring May 2016) is for 1,000km of 2D seismic and one exploration well.

Bob Cassie, managing director of Jacka Resources, said, “With the funds from this transaction, the recent placement and the current fully underwritten entitlements issue to raise a combined US$3.9mn, Jacka Resources will emerge with a strong balance sheet and can now look forward to progressing the Aje Field at OML113 offshore Nigeria through a final investment decision, which is expected in mid-2014, and into development; as well as further appraisal of the Hammamet West oilfield, offshore Tunisia; and exploration on OML113, in the Bargou permit surrounding the Hammamet West field, and the Ruhuhu licence, onshore Tanzania.”

Genel Energy Somaliland is the operator of the PSC with 50 per cent interest, Sterling Energy holds 40 per cent stake while Petrosoma Limited carries 10 per cent stake.

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