Recent news flow from Morocco is a “very positive indicator” for Tangiers Petroleum (LON:TPET, ASX:TPT), which has significant acreage in this sought-after stretch of coastal north-west Africa, according to City broker Old Park Lane.
Last week, acquisitive Genel Energy (LON:GENL) farmed into the Sidi Moussa block, while earlier today Cairn Energy (LON:CNE) took a 50 per cent stake in the Foum Draa area.
Combined the two deals are worth in excess of US$100 million and commit the two mid-cap exploration groups to drill two wells in the area.
The two licences are north and north-east of Tangiers’ Tarfaya Offshore Block, where the Anglo-Aussie group owns a 75 per cent stake and has opened the data room to potential farm-in partners.
“The recent news flow from Morocco is a very positive indicator for Tangiers as it demonstrates the value currently represented by the offshore acreage,”
“Given that Tarfaya is larger than Foum Draa and Sidi Moussa combined with four large prospects already identified on the block, we believe that Tarfaya is likely to attract asignificant amount of attention from potential farm-inees over the coming months.”
Morocco has become a honey-pot for the ambitious mid and large-cap exploration groups as the geological understanding of coastal West Africa has increased.
Alongside Genel and Cairn, Total (EPA:FP), Repsol (MCE:REP), Anadarko (NYSE:APC) and Kosmos (NYSE:KOS) are all active in the waters of the country’s coast.
Compared with its near neighbours Morocco is chronically under-explored, although this is changing with the latest influx of oil companies.
And it has several notable advantages over petroleum producing nations nearby.
The unrest that has swept the rest of North Africa has singularly failed to threaten Morocco, which is a parliamentary constitutional monarchy, while the tax regime there for oil and gas producers is amongst the most attractive anywhere in the world.
The state receives 25 per cent of any project and a 5 per cent royalty if gas is produced, which rises to 10 per cent for oil.
An unprecedented ten-year corporate tax holiday is offered for any discovery. This means the government take is never more than 35 per cent.
Contrast this with neighbouring Algeria where the authorities take 92 per cent and you can see why foreign investment is flooding into Morocco.