Mediterranean Oil and Gas Plc (LON: MOG) has signed two contracts with Genel Energy Plc (LON: GENL). The agreements will allow Genel to acquire a 75 percent working interest in the Phoenicia Energy Company Limited, a wholly-owned subsidiary of MOG.
The deal, worth $10 million, gives Genel a 100 percent carry clause on the first exploration well, as well as a 100 percent carry on the second exploration well up to a total of $30 million in gross expenditures.
If costs of the second well go over $30 million, Genel’s financing arrangements will ensure MOG receives a 25 percent share in all additional expenses.
An agreement with PECL means MOG continues to be the operator through completion of the first exploratory well. After that, Genel may opt to become the operator. All details should be worked out by early next year.
The Chief Executive of Mediterranean Oil and Gas, Bill Higgs said: "The signing of these two key contracts cements the relationship between MOG and Genel for the exploration of Area 4 in Malta and delivers on the Company's key objectives regarding its Malta licence."
MOG is licensed to explore Area 4, which lies to the south off the shores of Malta. It is expected that the area could hold between 130-200 million barrels of oil.