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Goodbody morning meeting wrap.

Analyst: Gerry Hennigan Kenyan Block 8 operator role filled
The role of operator in Block 8, offshore Kenya, in which Tullow recently farmed-in to, has been filled with the announcement that US-based Apache has acquired a 50% stake from Origin Energy. Earlier this month Australian-based Pancontinental indicated that Tullow had signed a farm-in agreement to take a 10% stake in the block. In return, Tullow paid $1m and will enable Pancontinental to avail of a 'free carry' through a "major portion of the work program" including the drilling of the Mbawa prospect. Tullow has an option to earn a further 5% should it fund a second well. Apache will refund $13.2m in historic costs to Origin as well as meet Origin's commitments for the initial exploration well on the block.

Complimentary exploration acreage recently acquired by Tullow in the region includes a 50% interest in four onshore Kenyan blocks, Blocks 10A, 10BB, 12A and 13T and the onshore South Omo Block in Ethiopia. In exchange, it is to reimburse past costs (c.$10m - $12m) and provide a carry on future costs (up to $23.75m). Commentary by Tullow management indicated that its bias towards onshore, rather than offshore, acreage was based in a belief that the onshore acreage was more likely to be oil, rather than gas, prone. As such, the farm-in to offshore Block 8 would appear to be somewhat of a departure, though we note an indication by Origin that it believes that the Mbawa prospect holds the potential for both oil and gas. Post the farm-in, Apache has a 50% interest in Block 8, with the remaining stakes held by Origin (25%), Pancontinental (15%) and Tullow (10%).

While a schedule of drilling activity has yet to be determined, consummation of the agreement with Apache establishes a partner base and an operator with the funding capacity to proceed with an exploration programme. As such, we would expect Block 8 to feature in the schedule of drilling activity in the not too distant future.
DYOR
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Pickle