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Savannah Petroleum confirms signing of Agadem PSC

Published: 08:14 31 Jul 2015 BST

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Savannah Petroleum confirms signing of Agadem PSC

Savannah Petroleum (LON:SAVP) told investors that the production sharing contract for the R3/R4 licence has now been signed by the Government of Niger’s representative at the Ministry of Energy and Petroleum.

A US$28mln payment, a signing bonus, will now be paid to Niger.

Andrew Knott, Savannah’s chief executive, described the PSC signing as ‘another landmark’ for the company.

“We have now licensed c.50% of the Agadem Rift Basin, which the board believes places the company in a very strong position for the future given our assessment of the scale, risk profile and cost structure of our assets,” Knott said in a statement.

“Savannah will now move to commence what we expect to be an aggressive exploration programme over our licenses which we hope will deliver material benefits for all of our stakeholders over the coming years."

The contract details that Niger’s ‘free carried’ interest in the asset is set at 15% (less than the 20% for another of the country’s large licence areas).

Additionally, some 60% of the signature bonus paid by Savannah will be included in the ‘recoverable costs’ should production is established in the future.

Savannah, under the terms of the PSC, will now be obligated to complete at least 750 square kilometres of 3D seismic and drill two wells during the first commitment period.

Subsequently it will also have to shoot a further 500 square kilometres of 3D, and drill two more wells.

Some 29 leads have already been identified in the expansive R3/R4 area. 

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