Centurion inks deal with Shell
Posted: 27 March 2006
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Centurion has signed an agreement with Shell Egypt West Manzala and Shell Egypt West Qantara.
The agreement provides for a Farm-in and LNG Cooperation Agreement, through which Shell will acquire a 50 per cent interest in two Centurion-operated exploration concessions in the Nile Delta onshore Egypt, namely the West El Manzala and West El Qantara concessions.
Shell and Centurion will cooperate in developing LNG opportunities if threshold quantities of natural gas are discovered on the Concessions. Centurion will continue as operator of the Concessions.
Under the Shell agreement, Shell will make an initial payment to Centurion of $15 million and will pay 50% of all future exploration and development costs for as long as they remain a concession owner.
If Shell continues to be a concession owner after the drilling of an initial five well exploration programme, an additional payment of US $20 million is payable by Shell to Centurion. If Shell elects not to continue, the interest of Shell will revert back to Centurion.
The first well in the five well exploration programmes was spudded on February 7, 2006.
Shell has agreed to pay additional premiums that could total up to a further $225 million as and when specific discovery volumes and development objectives are met.
The concessions
The West El Manzala and West El Qantara concessions are adjacent to each other in the onshore Nile Delta, and comprise approximately 800,000 acres. The blocks surround Centurion's 100% owned El Wastani Development Lease and South El Manzala Development Lease, which currently produce approximately 200 million standard cubic feet per day mmscf/d of natural gas and 6,500 barrels per day of liquids.
Extensive 3D seismic has confirmed several prospects and leads on the two blocks in plays that are similar to those successfully tested in Centurion's nearby development leases. Fifteen exploration and appraisal wells are planned in the 2006 capital program for the two concessions. The concessions each have an initial three year exploration term with the option to extend the exploration term by two additional three year terms.
Shell is one of the longest standing explorers in Egypt and currently participates in four other exploration concessions and ten development leases in Egypt, including an 84% interest in the North East Mediterranean Deepwater Concession.
Said Arrata, the Chief Executive Officer of Centurion, stated: "This is Centurion's first step in its strategy to target gas exports. We have always felt that it would be necessary to partner with a major oil company to carry out this strategy.
“It is a bonus for Centurion that Shell has agreed to become our partner in the exploration and development of two concessions that we believe may become Centurion's most important concessions in Egypt."
Posted by Editor Pipeline Magazine
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