After an internal strategic review, and as part of the finalisation of its obligations, Tangiers Petroleum has undertaken to exit the Tarfaya Offshore Block in Morocco
Tangiers has finalised its financial obligations in relation to the drilling of the TAO-1 well, being a total of USD 18.56m.
This has been funded by the company’s cash position and leaves Tangiers with a cash balance of approximately USD 1.1m.
The final cost of the TAO-1 well was in excess of the company’s internal budget. This was largely due to factors not associated directly with the drilling, which was completed safely and efficiently. Unfortunately, several of the costs were not fully quantified until after the well had reached total depth, at which time it was not possible for Tangiers to issue additional equity.
After an internal strategic review, and as part of the finalisation of its obligations, Tangiers has undertaken to exit the Tarfaya Offshore Block either by assigning its 25 per cent interest to Galp Energia (Galp), Tangiers’ partner and the Operator of the block, for consideration of USD 3.4m, or by withdrawal when the permit expires in February 2015.
Under an agreement with Galp, if the exit has not been completed within six months (or 12 months at the discretion of Galp), Tangiers’ Moroccan subsidiary, DVM International SARL (DVM), will be liable to Galp for a payment of USD 3.4m. Given that the permit expires in February 2015, and that the intention of both Galp and DVM is for DVM to assign the permit, Tangiers is confident that the contingent liability in DVM has a low chance of realisation.
Assignment or withdrawal is subject to the normal approvals process by the Moroccan government and the Office National des Hydrocarbures et des Mines (ONHYM).
Tangiers thanks the Moroccan Government and ONHYM for the opportunity to explore within Morocco.
Tangiers has also agreed a payment to Galp of USD 3.4m, in stock or cash, if the market capitalisation of Tangiers exceeds USD 50m within seven years of the agreement. This payment will also be required if Tangiers delists for any reason, such as due to a change of control.
Tangiers is currently assessing several new venture opportunities, which are at various stages of maturity; however, none of these opportunities have progressed to binding agreements at this time.