Africa Oil Corp. pursues an aggressive exploration strategy with assets positioned along 4 major oil producing provinces in eastern Africa. The Company has accumulated one of the largest holdings of exploration acreage in Africa with operated and non-operated interests in multiple production sharing contracts in Kenya and Ethiopia. Africa Oil began acquiring this large acreage position prior to the heightened activity of recent years and has enjoyed first-mover advantage, building a large and relatively-unexplored acreage position and then attracting strong partners to fund portions of the Company's capital requirements.
The Company's blocks 10BA, 10BB, 13T, and the Rift Basin Area are located in the East African Tertiary Rift trend which is an extension of the productive trend established in the Lake Albert area of Uganda where more than 1 billion barrels of recoverable oil has been discovered to date.
Block 9 provides exposure to the Cretaceous Rift system that is productive in Sudan, where more than 6 billion barrels of recoverable oil have been discovered.
In 2012 Africa Oil with partner Tullow Oil Plc announced successful results from the Ngamia-1 exploration well on Block 10BB, which was the first exploration well for the Company in the Tertiary Rift Play in the Lokichar Basin. The well encountered more than 240 meters of net oil pay and confirmed the discovery of a significant new oil producing province, and the first significant oil discovery in Kenya. This discovery was followed by Twiga South-1 some 22 km north, which also discovered and tested light gravity and further confirmed a potentially significant extension of the Tertiary Rift Play. A third significant discovery followed in the Etuko-1 well. By early 2014 the Company had announced additional major oil discoveries in the Ekales, Agete, Amosing and Ewoi wells in the Lokichar Basin. The Lokichar Basin oil volumes now exceed the threshold for development studies to commence.
Following these discoveries the Company and its partners have significantly ramped up seismic acquisition and mobilized extra rigs that over the next few years will be working to drill a very large prospect inventory that spans several sub-basins within the Tertiary Rift Trend of Kenya and Ethiopia. Meanwhile the Company with its partners continue an aggressive exploration campaign that will see additional exploration wells drilled to test high-impact prospects in the Cretaceous, Jurassic, and Permo-Triassic Rift plays. Africa Oil Corp currently maintains its exploration focus close to the current asset base but also continues to evaluate and monitor opportunities elsewhere in Africa.
During the first quarter of 2016, the Company completed its previously announced (November 9, 2015) farmout transaction with Maersk Olie og Gas A/S, a Danish oil and gas company owned by the Maersk Group ("Maersk") whereby Maersk acquired 50% of AOC's interests in Blocks 10BB, 13T and 10BA in Kenya and the Rift Basin and South Omo Blocks in Ethiopia in consideration for reimbursement of a portion of AOC's past costs and a future carry on certain exploration and development costs.
At closing, $439.4 million of farmout related proceeds were received from Maersk: $350.0 million as reimbursement of past costs incurred by the Company prior to the agreed March 31, 2015 effective date and $89.4 million representing Maersk's share of costs incurred between the effective date and closing, including a carry reimbursement of $15.0 million related to exploration expenditures.
During the second quarter of 2017, the Company and Maersk agreed to payment terms related to the $75.0 million advance development carry. Africa Oil is due to receive equal quarterly payments of $18.75 million at the end of each calendar quarter during 2018. These proceeds were recognized in accounts receivable ($56.2 million current and $18.8 million long term) and intangible exploration assets during 2017. Upon Final Investment Decision ("FID") of the South Lokichar development project, Maersk may be obligated to carry the Company for an additional amount of up to $405.0 million dependent upon meeting certain thresholds of resource growth and timing of first oil.
Detailed project descriptions are available in the Company's Financial Reports
and Annual Information Form