Cairn to farm-in to West African exploration block offshore Mauritania

8/9/2013

Cairn to farm-in to West African exploration block offshore Mauritania

EDINBURGH -- Cairn said that it has entered into a farm-in agreement with Chariot Oil & Gas Investments, for a 35% non operated interest in an exploration block offshore Mauritania in West Africa.

The block (C19), which is currently held by Chariot (90% and operator) and Societe Mauritanienne des Hydrocarbures (10%), comprises 12,175 sq km in water depths ranging from shallow shelf to over 2000 m. The block lies just to the north of existing discoveries in Mauritania and contains the Tertiary and Cretaceous deepwater fan plays proven further south along the West African margin. The two wells previously drilled in the shallow water areas of the block, both contained reservoirs with oil shows and point to the oil migration potential from the south.

The most prospective part of the block is covered by a new 3,500 sq km 3D seismic survey recently acquired by Chariot and currently being processed. The seismic will be interpreted with the objective of identifying a high grade drillable prospect by the end of Q1 2014.

Under the terms of the farm-in agreement, which is subject to Government approval, Cairn will pay Chariot $26 million for seismic and other back costs. Thereafter, exploration costs will be apportioned Cairn 38.89% (Working Interest (WI) 35%), Chariot 61.11% (WI 55%) and SMH 0% (WI 10%).

If, before the end of the first phase of the licence (15 June 2015), Cairn were to increase its interest to greater than 50% then Chariot will support Cairn’s application for operatorship of the block.

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