Under the deal, Maersk will acquire 50% of Africa Oil’s interests in Blocks 10BB, 13T and 10BA in Kenya and the Rift Basin and South Omo Blocks in Ethiopia. The deal is in consideration for reimbursement of a portion of Africa Oil’s past costs and a future carry on certain exploration and development costs.
Under the terms of the farm-out agreement, Maersk will pay Africa Oil$350 million upon closing of the transaction as reimbursement for approximately 50% of past costs incurred by Africa Oil prior to the agreed March 31, 2015 effective date.
Maersk will also reimburse Africa Oil for its acquired working interest share of costs incurred between the effective date and the closing date.
Commencing on the effective date, Maersk will also carry up to $75 million of the Company’s share of development expenditures upon confirmation of resources and $15 million of the Company’s share of exploration expenditures.
In addition, upon Final Investment Decision, Maersk will also carry up to $405 million of Africa Oil’s working interest share of development expenditures for the Lokichar Development Project.
The company said the total carry amount will depend on the Lokichar Development Project meeting certain thresholds of resource growth, and the timing of first oil.
The transaction is subject to host government and applicable regulatory approvals.