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Petsec increases operations in Yemen

30th May 2014

Petsec Energy has signed an agreement with Mitsui E&P Middle East to acquire its 8.5 per cent participating Interest in the Block 7, Al Barqa Permit, in the Republic of Yemen

Petsec increases operations in Yemen
Block 7 is an onshore exploration permit covering an area of 5,000 square kilometres located approximately 340 kilometres east of Sana’a, the capital of Yemen

The Mitsui agreement follows the agreement executed with AWE reported on the 28th March 2014, to acquire AWE’s participating interest of 21.25 per cent in Block 7.

Block 7 is an onshore exploration permit covering an area of 5,000 square kilometres located approximately 340 kilometres east of Sana’a, the capital of Yemen. The block is operated by Australia’s Oil Search and contains the Al Meashar oil discovery as well as an inventory of leads and prospects defined by 2D and 3D seismic surveys, which hold significant oil potential.

The terms of the transaction include a cash consideration of USD 400,000, the replacement of Mitsui E&P Middle East’s existing letter of credit with the Arab Bank, and working capital adjustments on completion. Completion of the transaction is subject to customary approvals from the joint venture partners, the Yemen government and the state owned Yemen Oil and Gas Company. Both the Mitsui and the AWE agreements will be presented together to the Yemen government for approval.

“We are pleased to have entered into this agreement with Mitsui to acquire their 8.5 per cent interest in Block 7, thereby increasing our interest to 29.75 per cent,” commented Terry Fern, Petsec chairman. “This enlarged interest will provide a meaningful exposure to high value oil assets within a region that is highly prospective for oil. Block 7 has the potential to add significant oil reserves to Petsec Energy’s resource base and significant value to the Company’s shareholders. We look forward to working with the operator, Oil Search, to further appraise the Al Meashar oil discovery and explore the remainder of the Block. Petsec hopes to build upon this initial investment in the Republic of Yemen by seeking further reserve development acquisitions in the region.”

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