Canadian explorer Vanoil Energy Ltd is in final stages of acquiring Avana Petroleum, which is exploring for crude oil and natural gas off Kenya’s Coast.
Avana holds 10 per cent interest in exploration area L9 in Kenya and 25 per cent stake in acreage A and B in Seychelles.
The deal will expand the position of Toronto Stock Exchange quoted Vanoil in East Africa, where it owns 100 per cent of exploration area 3A and 3B in northeastern Kenya, as well as Kivu Graben acreage in Rwanda.
Avana will get an estimated $15 million in shares of Vanoil and a further $4 million in future subject to discovery of oil and gas in the former’s offshore exploration areas.
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Vanoil’s chief executive Aaron D’Este said, “In a single transaction, Vanoil could double its net prospective resources, reduce risk through diversification and gain a host of joint venture partners with extensive experience across Africa.”
Avana’s partners Ophir Energy Plc and FAR Ltd have 60 per cent and 30 per cent stake respectively in offshore acreage L9 in Kenya covering 5,065 square kilometres.
The firm also holds a 25 per cent interest in Seychelles exploration areas A and B while Afren Plc has the other 75 per cent equity.
Avana’s chief executive Sam Malin said the deal with Vanoil will create a uniquely focused East African exploration company with a wealth of experience.
“Once complete, the transaction will also meet Avana’s objective of providing its shareholders with a listing on an internationally recognised stock exchange,” he said.
On completion of the transaction, Vanoil’s “net recoverable mean unrisked prospective resources” will more than double, rising from 927 million barrels of oil equivalent ( BOE) to over two billion.
Exploration area L9 lies directly to the south of acreage L8 where Apache Corporation in September discovered natural gas in Mbawa-1 well.
Ophir Energy in October estimated that acreage L9 has the potential of 11.8 trillion cubic feet of natural gas and well drilling will commence in 2013.
Vanoil Energy of Canada has signed a contract with state owned Sinopec Group of China to secure the last available onshore drilling rig stacked in Nairobi to sink a well in exploration area 3A in northeastern Kenya.
“This allowed Vanoil to avoid substantial mobilisation fees and to be ready for its first well in the first quarter of 2013,” said Mr D’Este.