MOG subsidiary Phoenicia Energy in farm-out agreement with Dominion Petroleum

Phoenicia Energy, a subsidiary of Mediterranean Oil & Gas (MOG), has signed an agreement with Dominion Petroleum to farm-out a 75% operated working interest in the production sharing contract (PSC) for Blocks 4, 5, 6 and 7 of Area 4, offshore Malta.

The Maltese PSC is situated to the north of Libya, covering an area of 5,715 square kilometers (sq km) in Maltese waters.

It includes both the Cretaceous rift potential of the Melita-Median Graben and the confirmed Eocene carbonate play of North Africa.

Phoenicia currently holds a 90% operated working interest in the Maltese PSC, with Leni Gas & Oil Investments holding the remaining interest.

Under the the farm-in agreement, Dominion will meet certain exploration costs up to a cap of $1.26m on behalf of MOG in relation to its remaining 15% working interest.

Dominion will also compensate MOG for a total amount of $900,000 in certain historic costs.

Completion of the farm-out agreement is conditional upon receipt of required Maltese government approvals and completion of the placing of shares by Dominion, announced on 24 June 2011.

The work obligations of the current period of the Maltese PSC comprise the acquisition of 1,000 sq km of 3D seismic data and the drilling of one exploration well.

The seismic survey results will enable the JV partners to define and evaluate the Tarxien prospect and other identified opportunities within Area 4, prior to any drilling decision.

The long-offset 3D will also allow for an analysis of the pre-tertiary rift-fill below the Eocene carbonates and potential Cretaceous targets.

The first exploration period runs until January 2013 and there is a minimum spend requirement of $5m, MOG said.