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Pura Vida: Work Program And Farm Out Of Flagship Moroccan Permit Ahead Of Schedule

Pura Vida (ASX: PVD) will start an earlier than expected search for a farm in partner for its flagship Mazagan permit offshore Morocco following a rapid acceleration of its work program.

The company now expects its two year work program to be completed in September 2012, well ahead of its original target of December 2013.

Pura Vida is nearing completion on the reprocessing of 3000 square kilometres of 3D seismic data and will also shortly start its drop core program that will collecting 50 seabed samples containing hydrocarbons.

The acceleration of the work program has allowed the company to move on advancing farm-out and drilling on the permit, which has 2.4 billion barrels of mean prospective recoverable resources.

This includes the appointment of EZDataRoom, which has a high historical success rate, to manage the farm-out process, which will start in October 2012.

"There has been an unprecedented level of transactional activity occurring offshore Africa recently, which suggests we are commencing this farm-out process at an ideal time," Pura Vida managing director Damon Neaves said.

"The recent activity in Morocco is an extension of this broader regional trend, which has seen the industry pursue major resource discoveries in Northwest Africa. We believe the formal farm-out process to be run by EZDataRoom will solicit strong interest from several large independents and majors."

Pura Vida had previously flagged that it was hoping to find a farm-in partner that would free carry it through a one to three well program.

Work program

Preliminary results from the seismic reprocessing have been encouraging with initial results expected in August and the complete project expected to be completed on budget in September.

The modern 3D seismic will provide the additional data needed to facilitate a successful farm-out deal by de-risking key drilling prospects such as Toubkal, which has the potential for 790 million barrels of oil and is a 'look-a-like' of the billion barrel Jubilee field in Ghana - the largest oil discovery in West Africa in the past decade.

Meanwhile, the drop core program will identify areas of active hydrocarbon generation and entrapment by looking for natural seepages of hydrocarbons to the seabed - a common occurrence in areas where petroleum systems are established.

Pura Vida said that in frontier areas such as Mazagan, finding such seepage significantly improves the probability of reservoired subsurface hydrocarbons.

It has already carried out satellite sea surface oil slick analysis to assess indications of hydrocarbons on the sea surface to help located the best seabed sampling points.

The R/V Geoexplorer will shortly commence mobilisation to Morocco to undertake the program in August.

Mazagan background

The Mazagan permit is located in the Essaouira Basin, a proven hydrocarbon system, with shows demonstrated in 80% of wells drilled offshore Morocco.

Major discoveries in the West African transform margin have spurred a 'land grab' along the North African coast.

The Mazagan permit covers 10,900 square kilometres and has been the subject of 3,570 square kilometres of modern 3D seismic

Morocco has an attractive fiscal regime with a 70/30 revenue split in the company's favour. While the Government gets a small royalty on top of that, Pura Vida also has a full 10 year tax holiday from corporate income tax.

Analysis

With Pura Vida trading on a risked EV/Prospective Resources basis of about A$0.12 per barrel of oil equivalent (boe), the company represents an attractive opportunity to buy into a highly prospective Africa oil play when compared to the industry EV/Prospective Resources average of about A$1 per boe.

The current work program will de-risk the company's prospects while securing a farm-in partner will allow it to assess the hydrocarbon potential and possibly production of the permit while minimising costs.

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