Niko Resources signs Kurdistan production sharing deal
2008-05-20 14:45 MT - News Release
Mr. Edward Sampson reports
NIKO SIGNS FIRST PRODUCTION SHARING CONTRACT IN KURDISTAN
Niko Resources Ltd., as operator for a consortium, has entered into its first production sharing contract (PSC) with the Kurdistan regional government (KRG) for the exploration, development and production of petroleum resources in the 846-square-kilometre Qara Dagh block in Sulaymaniyah governorate of the federal region of Kurdistan, Iraq.
One of the members of the consortium has been in advance negotiations with the KRG over the past eight months. Forming an acceptable consortium with a qualified operator was one of the terms to be finalized.
The PSC provides that Niko will operate and have a 27-per-cent participating interest. The block lies on trend with existing discoveries, a portion of which covers a large unexplored 65-kilometre-long by six-kilometre-wide surface structure with existing oil seeps. Of interest, Qara Dagh translates to Black Mountain.
The consortium has a 60-per-cent participating interest that is not subject to further dilution by the KRG. The government will have a direct 20-per-cent interest and will be carried exclusively by the consortium. The remaining 20 per cent will be assigned by the government to a third party or parties, within a period of eight months, with the requirement to pay back the share of costs incurred by the consortium.
The obligations under the PSC include a one-time signature bonus and capacity-building bonus paid to the government within 30 days from the execution date of the contract. Annual contributions to personnel, training and technological funds established by the government, as well as community support contributions, are to be paid over a period of 15 months to assist with infrastructure projects in the area. The consortium will also be responsible for paying its proportionate share of certain production bonuses in the case of commercial discovery. The remaining minimum work program obligations represent an exploration commitment, expected to commence in the near future, which includes the acquisition, processing and interpretation of a minimum of 300 kilometres of 2-D seismic data and drilling of one well during the first exploration period.
Edward Sampson, chief executive officer, and Bill Hornaday, chief operating officer, were both in Erbil for the signing and stated, "Niko is excited about the potential for the block and is planning to commence operations immediately."
