TransAtlantic Petroleum Corp. has farmed out Blocks 4173 and 4174, two of its exploration licenses in southeastern Turkey, to an oil and gas exploration company with operations in Turkey.

In exchange for a 75% interest in both the exploration licenses, the company will drill an exploration well before the end of this year to test the Bedinan Ordivician formation (approximately 3,700 meters) on one of the licenses. TransAtlantic will own a 25% interest in both licenses and will be carried through the costs of testing the well.

The company farming into the blocks will become the operator of Blocks 4173 and 4174. Transfer of the interests in the licenses is subject to government regulatory approval. If the exploration well leads to a commercial discovery, the license on which the well is drilled would be converted to a 20-year production lease (extendable for a further 20 years in two 10-year increments) which would bear a 12.5% royalty. Currently, the tax rate in Turkey on net corporate income is 20% (subject to a further 15% withholding tax on profits transferred out of Turkey).

Tags: TransAtlantic Petroleum Corp