Last week a Heads of Agreement (HoA) was executed with the Government of the Republic of Kenya that defines the terms for Block L9. The award of L9 remains subject to the signature of a Production Sharing Contract ('PSC') with Kenya's Ministry of Energy, currently scheduled to take place in mid April in Nairobi.

Block L9 represents one of the last, and the best new licensing opportunity along the whole of the deepwater East African margin and has many geological similarities to the recently and successfully drilled plays offshore Tanzania.

Cath Norman, Flow Energy's Managing Director commented, 'Flow Energy has long recognized the prospectivity of the Lamu Basin, being the operator of block L6 since 2006. The award of L9 to Flow and its partners is testimony to the good working relationship that Flow has with the Government of Kenya and longstanding commitment to high quality exploration in the country. We are pleased to introduce Dominion Petroleum and Avana Petroleum to Kenya and our JV. Their expertise in other regions of East Africa will complement Flow's own expertise in Kenya and we look forward to working with them alongside the Government of Kenya in the future.

As reported in yesterday's news, the award to Flow and their partners was made in a highly competitive bid and we are very pleased to be successful amongst such high caliber competition.'

Block L9 has seen one well drilled in it previously, the Simba-1 well in 1979. The Simba well encountered gas shows in the tertiary and upper Cretaceous. The Simba results suggest a working hydrocarbon system in the Lamu basin and offshore oil seeps have also been identified to the north of L9.

Following signature, the Initial Exploration Period of the PSC will last for two years. During this time, a gross minimum work commitment of $6.15m inclusive of the acquisition of 500 square kilometres of 3D seismic data is required.

After this initial period, there is an option to relinquish the PSC or commit to another two year exploration period with the obligation to drill one well in that period.

Partners in the L9 Joint Venture are to be: Flow Energy Limited 30% Dominion Petroleum Limited 60% and operator Avana Petroleum Limited 10%

Tags: Flow Energy