Centurion Energy finds farm-in partner on Nile
2006-03-20 09:46 ET - News Release
Mr. Said Arrata reports
Centurion Energy International Inc. has signed an agreement with Shell Egypt West Manzala GmbH and Shell Egypt West Qantara GmbH. The agreement provides for a farm-in and LNG co-operation agreement, through which Shell will acquire a 50-per-cent interest in two Centurion-operated exploration concessions in the Nile delta, onshore Egypt, namely the West El Manzala and West El Qantara concessions. Subject to approval from the relevant authorities, Shell and Centurion will co-operate in developing LNG opportunities if threshold quantities of natural gas are discovered on the concessions. Centurion will continue as operator of the concessions. The ultimate parent of the two Shell entities is Royal Dutch Shell PLC.
The farm-out to Shell is subject to certain conditions, including obtaining the government approvals for a transfer that are required under the concessions agreements.
Under the Shell agreement, Shell will make an initial payment to Centurion of $15-million (U.S.) and will pay 50 per cent of all future exploration and development costs for as long as it remains a concession owner. If Shell continues as a concession owner after the drilling of an initial five-well exploration program, an additional payment of $20-million (U.S.) is payable by Shell to Centurion. If Shell elects not to continue, the interest of Shell will revert back to Centurion. The first well in the five-well exploration program was spudded on Feb. 7, 2006.
Shell has agreed to pay additional premiums that could total up to a further $225-million (U.S.) as and when specific discovery volumes and development objectives are met.
The West El Manzala and West El Qantara concessions are adjacent to each other in the onshore Nile delta, and comprise approximately 800,000 acres. The blocks surround Centurion's wholly owned El Wastani development lease and South El Manzala development lease, which currently produce approximately 200 million standard cubic feet per day of natural gas and 6,500 barrels per day of liquids.
Extensive 3-D seismic has confirmed several prospects and leads on the two blocks in plays that are similar to those successfully tested in Centurion's nearby development leases. Fifteen exploration and appraisal wells are planned in the 2006 capital program for the two concessions. The concessions each have an initial three-year exploration term with the option to extend the exploration term by two additional three-year terms.
Shell is one of the longest standing explorers in Egypt and currently participates in four other exploration concessions and 10 development leases in Egypt, including an 84-per-cent interest in the Northeast Mediterranean deep-water concession.
Said Arrata, chief executive officer of centurion, stated: "This is Centurion's first step in its strategy to target gas exports. We have always felt that it would be necessary to partner with a major oil company to carry out this strategy. We have also felt that Shell would be the ideal candidate and we believe we have made a choice that will put Centurion on the fastest possible track to monetizing potential gas resources at world prices. It is a bonus for Centurion that Shell has agreed to become our partner in the exploration and development of two concessions that we believe may become Centurion's most important concessions in Egypt. We thank Shell for showing confidence in our operating and exploration abilities, and conversely Centurion is confident in Shell's experience and abilities in the LNG business."
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