Dominion Petroleum (AIM: DPL) has signed an agreement in principle with Les Etablissments Maurel & Prom (M&P) to farm in to the Mandawa and Kisangire PSAs (production sharing agreements) onshore Tanzania, giving M&P additional interests in both projects, while reducing Dominion’s funding obligations.
M&P will gain an additional 40% interest in Mandawa PSA to take its total stake in the project to 90%, as well as a 35% interest in Kisangire, reducing Dominion’s interest in both PSAs to 10%. FTSE 250 oil and gas producer Heritage Oil (LSE: HOIL) operates and owns the remaining 55% interest in Kisangire.
In return for the additional interests, Dominion will see its funding requirements reduced from 100% to 20% of the drilling costs and to 10% of all associated expenses in respect of the Kianika-1 well on the Mandawa license. M&P’s interest in Mandawa could rise to 100% if the government of Tanzania agrees that exploration expenses incurred on other licenses can be carried over to the Mandawa license, at which point all of Dominion’s costs relating to the Kianika-1 well will be reimbursed.
“This agreement with Maurel & Prom constitutes active portfolio management and is part of the corporate repositioning recently undertaken. It significantly reduces Dominion's financial commitments for 2010 and allows us to focus more attention on our higher impact exploration assets in Uganda and Offshore Tanzania. We plan to increase activity in these two core areas during the course of this year,” said Chief Executive of Dominion Petroleum Andrew Cochran.
Disclosure: The author holds no positions in the company