Genel Energy announces farm-out agreement over Somaliland oil block

December 20, 2021

Genel Energy PLC on Monday announced the signing of a farm-out agreement with OPIC Somaliland Corp, for the SL10B13 block, onshore Somaliland.

OPIC Somaliland is a company backed by CPC Corp, a Taiwanese state owned petroleum and gasoline company.

Under the agreement, OPIC will pick up a 49% working interest in return for a cash payment equal to 49% of Genel’s historic back costs, in addition to a cash premium.

Genel will remain as operator for the block, which has multiple stacked prospects of over 5 billion barrels of prospective resources.

The field partners will cooperate to plan exploration drilling for the block and are aiming to drill a well in 2023 which is expected to have a gross cost of USD40 million.

The agreement has already been approved by Somaliland’s government.

The following statement was issued today by Genel Energy PLC

Genel is pleased to announce it has signed a farm-out agreement relating to the SL10B13 block, Somaliland, with OPIC Somaliland Corporation (‘OSC’), with all its share of future capital investment coming from CPC Corporation, Taiwan, the state-owned enterprise of Taiwan. Under the agreement, OSC receives a 49% working interest in the block for a cash consideration of 49% of all Genel’s historic back costs, plus a cash premium. Genel previously held a 100% working interest and will continue as an operator.

Somaliland has significant underexplored potential, with geology analogous to Yemen. The SL10B13 block is highly prospective, with multiple stacked prospects with over 5 billion barrels of prospective resources identified from the interpretation of the 2D seismic data acquisition completed in January 2018 (pictured).

The field partners will now work together to plan exploration drilling in this block, to drill a well in 2023. It is currently estimated that a well can be drilled for a gross cost of c.$40 million.

The prospective SL10B13 area is c.150 kilometers from the port at Berbera, offering a route to international markets.

The agreement has been approved by the Government of Somaliland.

Mike Adams, Technical Director of Genel, said: “Somaliland is a highly-prospective and largely unexplored region, with a compelling technical case for the drilling of a well. Oil seeps confirm a working petroleum system, and one prospect alone could target over half a billion barrels across multiple stacked reservoirs. Being able to drill this at a low cost to Genel, with a clear route to market in a successful case, fits with our strategy, and we look forward to working with OSC.

During the energy transition, the hydrocarbons that should be developed are those that are low-cost, low-carbon, and deliver a material and tangible benefit to local people and the host government. Somaliland has the potential to tick all of those boxes.”