Addis Ababa, Ethiopia, February 11, 2009 (Ezega.com) - Swedish oil explorer Lundin Petroleum is selling its Lundin East Africa BV and Kenya BV to the Canadian Africa Oil Corp for $20 million. Lundin Petroleum announced this on its press release on February 5, 2009.
Ashley Heppenstall, President and CEO of Lundin Petroleum commented "We have been very successful over the past several years in building a portfolio of exploration assets in East Africa. The strategy to grow our business in East Africa was particularly driven by the prospectivity of our exploration acreage in Sudan. In view of last years disappointing drilling results in Sudan, our East African acreage has less materiality to us and as a result we have decided to divest our interests. Our exploration efforts will continue to be focused on Norway, Russia and South East Asia."
Africa Oil will pay Lundin Petroleum approximately USD 20 million, which will be funded through a loan from Lundin Petroleum to Africa Oil, maturing on 31 December 2011, and bearing interest at USD six-month LIBOR plus 3 percent. This loan will be convertible into shares of Africa Oil on the basis of CAD 0.90 per share.
A month after officially announcing the discovery of oil on its territory, the Ethiopian government signed an oil exploration agreement with Lundin East Africa. The deal allows the Sweden-based oil company to explore and develop petroleum in the Ogaden Basin region. The contract was signed on November 7, 2006, by Ethiopian Minister of Mines and Energy, Alemayehu Tegenu, Lundin’s Chairman, Ian Lundin, and Lundin’s General Manager, James Philips.
Lundin is one of companies that are exploring gas and oil prospects in Ethiopia, having been granted permission to explore the region for gas and oil in Nov, 2006. The Ogaden National Liberation Front (ONLF), which seeks independence for the region, attacked an oil installation operated by a Chinese company in April 2007, killing dozens of people and prompting a swift response from the Ethiopian government.
"We feel that this basin not only has proven gas potential but also light oil," said James Phillips, Lundin Petroleum's vice president of exploration for Africa and the Middle East, at the Africa Upstream 2008 Oil Conference in Cape Town.
Africa Oil is a Canadian oil and gas company with exploration interests in East Africa. Africa Oil is headquartered in Vancouver, Canada, and one of its major shareholders is related to the Lundin family.
This article was written by Eden Habtamu reporting for Ezega.com from Addis Ababa, Ethiopia. She can be reached by email at News@Ezega.com. The article can be reprinted in full or in part elsewhere but only by giving full credit to Ezega.com. If reprinted on a website, we ask that you place this active link: Ezega Ethiopian News, pointing to http://www.Ezega.com.