- Tanzanian government has approved farm in of four exploration licences for Canadian Heritage Oil Ltd held by two other companies, officials announced today.
A farm-in agreement allows a company to transfer part of its stake in an exploration area in exchange for its expenditures being borne by another company.
Heritage said Tanzania has allowed it to farm-in Kisangire licence, an onshore exploration area covering 7,280 square km held by Dominion Petroleum Limited and Lukuliro, another onshore exploration area of 8,828 square km also held by Dominion.
Kisangire and Lukuliro Production Sharing Agreement (PSA) was originally awarded to Dominion Petroleum Ltd. in May 2005. Heritage signed a farm-in agreement with Dominion in April 2008.
Under farm-in deal, Heritage has right to initially earn a working interest of 55 percent in both Kisangire and Lukuliro licences by funding all costs to acquire a minimum of 150 kilometres of 2D seismic data.
It also has an option to earn an additional working interest of 15 percent to raise its participating interest to 70 percent by funding 87.5 percent of the costs of a second well.
"The minimum exploration expenditure required during the first exploration period, which includes seismic acquisition and the drilling of two wells is $10 million," Heritage said in April.
Canadian company said it also had received approval to farm-in the Latham and Kimbiji licences, held by UK-based Petrodel Resources Ltd. The two areas cover a combined 9,354 square km onshore, near shore and in deep water.
Heritage said the deal with Petrodel gave it the right to earn a 70 percent working interest in Kimbiji and a 29.9 percent working interest in Latham in exchange for paying all seismic costs for the initial exploration periods on the two licenses.
The agreement also requires Heritage to drill two exploration wells on Kimbiji.
Petrodel won its PSA for Latham and Kimbiji in 2006, getting an initial four year exploration period.
The company is allowed to seek extensions of four years for Latham and three years for Kimbiji, and the right to a development licence with a term of 25 years.
Tanzania has about 15 companies involved in exploration in its new oil rush finds.
Heritage said it plans to drill its first well in Tanzania in the second half of 2009.
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