Somaliland government approves agreement between Genel Energy PLC and OPIC Somaliland corp

One of the largest London-listed independent hydrocarbon producers,Genel Energy PLC, has on Monday announced the signing of a farm-out agreement with OPIC Somaliland Corp, for the SL10B13 block, onshore Somaliland.

Under the agreement, OPIC which is a Taiwanese state owned petroleum and gasoline company, will pick up a 49% working interest in return for a cash payment equal to 49% of Genel’s historic back costs, in addition to a cash premium.

Genel will remain as operator for the block, which has multiple stacked prospects of over 5 billion barrels of prospective resources.The field partners will cooperate to plan exploration drilling for the block and are aiming to drill a well in 2023 which is expected to have a gross cost of USD40 million.

This agreement has already been approved by government of Somaliland.

Somaliland has significant underexplored potential, with geology analogous to Yemen. The SL10B13 block is highly prospective, with multiple stacked prospects with over 5 billion barrels of prospective resources identified from the interpretation of the 2D seismic data acquisition completed in January 2018.

The field partners will now work together to plan exploration drilling in this block, to drill a well in 2023. It is currently estimated that a well can be drilled for a gross cost of c.$40 million.

The prospective SL10B13 area is c.150 kilometers from the port at Berbera, offering a route to international markets.

According to Mike Adams who is the Technical Director of Genel, Somaliland is a highly-prospective and largely unexplored region, with a compelling technical case for the drilling of a well. He said that Oil seeps confirm a working petroleum system, and one prospect alone could target over half a billion barrels across multiple stacked reservoirs. He added that being able to drill this at a low-cost to Genel, with a clear route to market in a success case, fits with their strategy, and they look forward to working with OSC. 

Genel has low-cost and low-carbon production from the Sarta, Taq Taq, and Tawke licences in the Kurdistan Region of Iraq, providing financial resilience that allows investment in growth and the payment of a material and sustainable dividend, even at a low oil price.