Mafraq Energy, which currently owns 35% of Block 70, will acquire the remaining stake for a consideration of up to $14m and cover all costs from December 2023
Swedish oil and gas company Maha Energy has announced its plans to divest its remaining 65% working interest in Block 70, Oman, to its partner Mafraq Energy for a total consideration of up to $14m.
Mafraq Energy, which currently owns 35% of Block 70, will assume responsibility for the project and cover all costs from 1 December 2023.
Up to the closing date, Maha will receive a purchase price equivalent to $2m, with an earnout amounting up to $12m, associated with actual produced volumes from Block 70.
Payment will start from a cumulative net production volume of 1 million barrels with a maximum to be reached if the production volume touches 12 million barrels.
Upon closing, Maha will be free from all obligations and liabilities concerning Maha Oman.
The transaction is subject to signing a definitive sale and purchase agreement, and approval of the Government of the Sultanate of Oman among other closing conditions.
Maha Energy CEO Kjetil Solbraekke said: “Block 70 has a high viscosity oil. I believe the project has to consider a heat influx strategy to deal with this.
“It will require new tests, significant investments and a very dedicated operator, which I believe we will have with Mafraq Energy who has worked on this asset since the very beginning. We wish Mafraq Energy all the luck with their future work on Block 70.
“Maha will now be able to focus on developing the business in Latin America, where we are especially enthusiastic about our position in Venezuela.”
Mafraq Energy CEO Talal al Subhi said: “Mafraq Energy and Oman value the wealth of experience and work that was injected in Block 70, and we look forward to continuing the project and creation of value for Oman. Mafraq will always value the relations with Maha Energy.”
In 2020, Maha was awarded Block 70 in Oman, and the company, through its fully-owned subsidiary Maha Energy Oman, decided to farm out 35% interest to Mafraq Energy in 2022.
In the last two years, Maha has conducted a complete work programme and fully completed the Minimum Work Obligations of the initial phase of the Exploration and Production Sharing Agreement (EPSA).
This year, the company started a short-term production test with five out of eight newly drilled production wells producing oil to surface at an estimated rate of 300 barrels of oil per day.
The produced oil did not meet processing specifications for third-party facilities, as it was heavy with an API of 11-13 degrees and higher viscosity than pre-testing estimates.