Agriterra Signs Somo Block Farmout With Africa Oil

17th Jun 2010 17:31

LONDON (Dow Jones)--Agriterra Ltd. (AGTA.LN), an AIM listed company focused on the agricultural sector in central and southern Africa, said Thursday it has entered into a farmout agreement with Africa Oil Ethiopia B.V., a subsidiary of Africa Oil Corp. (AOIFF), a Canadian oil and gas company relating to Agriterra's legacy interest in the South Omo Block oil concession in the Federal Democratic Republic of Ethiopia. MAIN FACTS: -The transaction will allow the Company to participate in any future value uplift realized from the exploration work being carried out by Africa Oil, whilst maintaining its focus on its agricultural activities in southern Africa. -Under the terms of the farmout agreement, which are subject to the approval of the Government of Ethiopia, Agriterra has agreed to assign 80% of its interest in the concession to Africa Oil. -In return, Africa Oil will fund 100% of the costs of carrying out 500 kilometers of 2D seismic acquisition and processing, a field geology program and a surface geochemistry program. -Africa Oil estimates that its total cost exposure for the Work Program is approximately $6.5 million with the majority of the expenditure to be incurred in the first half of 2011. -As part of the farmout agreement, Agriterra will also receive a credit of up to $2.517 million from Africa Oil, to be set against future costs relating to the concession in recognition of the past costs incurred by Agriterra, prior to its strategy change to focus on agricultural development. -Shares closed Thursday at 3.2 pence. -By Tommy Stubbington, Dow Jones Newswires; 44-20-7842-9268; [email protected] (END) Dow Jones Newswires June 17, 2010 12:31 ET (16:31 GMT)