Armour granted Uganda Kanywataba Block exploration licence
Armour Energy has advised that it has been granted an exploration licence for the Kanywataba Block, at the southern end of Lake Albert in the Albertine Graben, in Uganda.
Armour advised that it recently concluded negotiations with the Ugandan government, enabling grant of the exploration licence following signing of a production sharing agreement with the government, with Armour the first company to have been granted an exploration licence out of the first licensing round tender issued by the government in late-2015.
The licence is for a two-year period, and subject to completing the work program for that period, is renewable for another two-year period, Armour stated, with the first period work program involving undertaking geological and geophysical works, reviewing existing data and reprocessing seismic data, and acquisition of 100 line kilometres of 2D seismic.
“The grant of the licence is a significant milestone for Armour and provides exposure to a world-renowned oil province,” Armour stated.
Armour advised that, based on the 13 September 2017 Highly Prospective Oil Columns Kanywataba Block internal report, it has assessed the prospectivity of the block, estimating that the low, best and high unrisked prospective oil resource ranges from 646–969 MMbbl oil-in-place, across seven prospects each with stacked reserves, with it considering the main resource risk to be potential loss of hydrocarbon charge.
Subject to Ugandan government consent, Armour advised that it has agreed to transfer the tenement to a project-specific company in which it will have a 16.82% interest and DGR Global, a major shareholder in Armour, an 83.18% interest, while, until the time of transfer or if such a transfer does not occur, Armour and DGR have agreed that the beneficial interest in the block will be split 16.82% to Armour and 83.18% to DGR.
Armour stated that in consideration for this split, DGR has agreed to meet tenement expenditure and work program commitments for the first two-year period of exploration and indemnify Armour for these costs, with DGR having now funded US$873,000 towards the performance guarantee and a US$442,000 payment to complete grant of the lease, and having agreed to meet expenditure of US$1.98 MM for the year-one and two exploration commitments.