Genel Energy PLC (LSE:GENL, OTC:GEGYY) has signed a farm-out agreement with a Taiwan state backed vehicle, OPIC Somaliland Corporation (OSC), to team up in the SL10B13 block, Somaliland.

OSC will receive a 49% interest in the block in return for 49% of Genel’s back-costs, plus a cash premium. Genel will retain 51% and will continue to be the project operator.

The exploration block is described as “highly prospective” with more than 5bn barrels of prospective resources estimated based on 2D seismic data, captured in 2018. The geology of the region is described as being analogous to Yemen.

It is planned that Genel and OSC will aim to drill an exploration well in 2023, with gross drill costs estimated at US$40mln,

“Somaliland is a highly-prospective and largely unexplored region, with a compelling technical case for the drilling of a well,” said Genel technical director Mike Adams.

“Oil seeps confirm a working petroleum system, and one prospect alone could target over half a billion barrels across multiple stacked reservoirs. Being able to drill this at a low-cost to Genel, with a clear route to market in a success case, fits with our strategy, and we look forward to working with OSC.

Adams added: “During the energy transition the hydrocarbons that should be developed are those that are low-cost, low-carbon, and deliver a material and tangible benefit to local people and the host government. Somaliland has the potential to tick all of those boxes.”

Genel noted that the farm-out deal has been approved by the Government of Somaliland.

Source: Proactive