Kuwait Energy (KEC) has announced the signing of the Block 9, Iraq Farm-out Agreement with Dragon Oil (a wholly-owned subsidiary of Emirates National Oil Company Ltd, the national oil company of Dubai).
As per the Farm-out Agreement, Kuwait Energy will assign a 15% participating interest in the Block 9, Iraq service contract comprised of 8.57% participating interest in Block 9, Iraq to Dragon Oil in consideration for US$100 million in cash; and 6.43% participating interest in Block 9, Iraq to Dragon Oil in settlement of a dispute with Dragon Oil in relation to a non-controlling interest in Block 9, Iraq.
The agreement was signed on 11 February 2018 by Ali Rashid al Jarwan, Dragon Oil Chief Executive Officer (CEO); and Abby Badwi, the CEO of Kuwait Energy.
Abby Badawi (pictured), Chief Executive Officer of Kuwait Energy, said:
“This is a great moment for Kuwait Energy and Dragon Oil. The extension of our Block 9 partnership with Dragon Oil has meant that both Companies can work as equal equity partners on the concession allowing us to best utilise our joint technical expertise in delivering the submission of the Block 9 full field development plan to the Iraqi government.
“The reduction in future Block 9 capital expenditure exposure coupled with the material cash injection strengthens Kuwait Energy liquidity position going forward.“
The assignment of the 15% participating interest in Block 9, Iraq from Kuwait Energy to Dragon Oil remains subject to Iraqi government and partner approval. Post granting of these approvals, Kuwait Energy will remain the operator with a reduction in participating interest from 60% to 45%,
Dragon Oil participating interest will increase from 30% to 45% with the remaining 10% participating interest being held by Egyptian General Petroleum Company.