Kenya Approves Africa Oil's Farm Out Deal With Maersk Oil & Gas

Africa Oil Corp has received approval from the Government of Kenya for the farm out deal with Maersk Oil & Gas.

As per deal announced in November, Maersk Oil & Gas, a Danish oil and gas company owned by the Maersk Group, will acquire 50% of Africa Oil'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 Africa Oil's past costs and a future carry on certain exploration and development costs.

“We are very pleased to have received approval from the Government of Kenya. We feel Maersk will be an excellent partner in terms of technical and financial strength and experience critical to moving the development project forward. This transaction puts Africa Oil in the enviable position of not requiring any additional equity financing prior to first oil and will allow us to weather the current difficult oil price environment should it continue into 2016,” Keith Hill, Africa Oil's President and CEO, commented.

Under the terms of the farm-out agreement, upon closing of the transaction Maersk will pay Africa Oil $350 million as reimbursement for approx. 50% of past costs incurred by Africa Oil prior to the agreed March 31, 2015 effective date. Maersk will also reimburse Africa Oil for its acquired working interest share of costs incurred between the effective date and the closing date. Commencing on the effective date, Maersk will also carry up to $75 million of the company's share of development expenditures upon confirmation of resources and $15 million of the company's share of exploration expenditures.