Petromanas signs farm-out deal for Albanian blocks

Oil and gas company Petromanas Energy has entered into a definitive farm-out deal with a wholly-owned subsidiary of Royal Dutch Shell for two onshore exploration blocks in Albania.

Under the deal, Shell will farm into Petromanas’ rights on Blocks 2 and 3, which cover about 852,000 acres.

The Anglo-Dutch energy company will take a 50% participating interest in these blocks in exchange for payments and carried costs up to $50.3m.

The company will carry Petromanas on a work programme worth up to $22.5m in the first exploration period and, subject to entering into the second exploration period, a second exploration well.

Petromanas said any potential excess costs of the work programme over the carried amounts will be jointly paid by both parties in proportion to their participating interest.

Shell will also pay a total of $16.3m in cash, of which $11m is refundable if Petromanas gets a partner for its other Albanian blocks during the current exploration period.

"We believe that partnering with a global leader like Shell provides a validation of the potential of our Albanian assets and the exploration work we have completed to date," said Petromanas CEO Glenn McNamara.

"Our 2012 drilling program remains unchanged and is moving ahead as planned from a position of enhanced strength and we expect the addition of a further seismic program to accelerate the exploration and development of the blocks."

Petromanas will remain the operator of the exploration blocks.