Under the farm-out agreement, Orca will pay 100% of the costs of the first well up to EUR4.3m and 70% thereafter to complete the drilling phase.
If the well is tested and completed, Orca will then earn an additional 5% by paying 100% of the testing costs up to EUR1.3m and 75% thereafter.
Orca will also pay back costs of EUR0.6m, and Northern’s equity will reduce to 30% during drilling and then by a further 5% if the well is flow tested in which case Northern will retain 25%.
The principal target within the Longastrino Permit is the La Tosca prospect and the 3-D seismic that covers the prospect shows a well defined seismic amplitude anomaly within the mapped closure.
The La Tosca-1 well will be drilled to an estimated total depth of approximately 2,500m and the well is scheduled to be drilled in 2011.
Using modern 3D seismic, Northern has interpreted the La Tosca prospect, with 45 billion cubic feet of gross mean prospective resource.
Work is being progressed to secure a well site to drill the well for this farm-out, and drilling of the La Tosca prospect will target an upside of 85 billion cubic feet gross prospective resource of gas.
Northern will be the operator during the drilling and testing phase and Orca will assume operatorship of the permit thereafter.
Orca is engaged in hydrocarbon exploration, development and supply of natural gas in Tanzania and the development of high potential oil and gas exploration, appraisal and production opportunities in Europe, the Middle East and Africa.
