Agriterra notes the recent developments regarding Tullow Oil plc's farm-in transaction on the 29,465 sq km South Omo Block in Ethiopia, a legacy concession in which Agriterra has a 20% interest, following the Company's farm-out agreement with Africa Oil Corp., announced on June 17, 2010.
Tullow completed a farm-in agreement on South Omo with Africa Oil on December 9, 2010, which was subsequently approved by the Ministry of Mines and Energy in Ethiopia on February 22, 2011. This farm-in agreement has provided Tullow with a 50% interest in the Concession and full operational control of its development, leaving Africa Oil with a 30% stake, and Agriterra with the remaining 20% interest. The South Omo Block is within the Tertiary age East African Rift, just north of Lake Turkana, located across the Ethiopian border in Kenya and within the same petroleum system as Africa Oil's Kenya Block 10BB and Tullow's Ugandan discoveries.
Agriterra Chairman Phil Edmonds said, "This is a significant step towards accelerating exploration on the South Omo Block, which will be guided by a leading E&P company with extensive practical experience of operating in Africa. Tullow has an exceptional technical and operational track record, with an excellent success rate in regard to exploration. This expertise has been demonstrated by Tullow's successful development of its Ghanaian and Ugandan blocks, and I believe that this experience, which includes expertise in the East African Rift Basin, presents Tullow as an extremely attractive operator to drive exploration on the concession.
"Exploration programmes on the South Omo block will be funded by Tullow and Africa Oil, as per our original farm-out agreement with Africa Oil, which included sufficient credits from Africa Oil to Agriterra to take the Concession through to drilling. The exploration programme, which has been approved by the Ministry of Mines and Energy in Ethiopia, will commence shortly.
"Should a discovery be made on the block, then Agriterra's 20% interest in South Omo could prove to be very lucrative for the Company's shareholders and we look forward to future announcements regarding the South Omo concession."