PA Resources to Acquire 35% Share in mer profond sud permit

PA Resources to Acquire 35% Share in Mer Profond Sud Permit

11-21-2007

PA Resources AB has signed an agreement with Murphy West Africa Ltd. to acquire a 35 percent share in the Mer Profond Sud Permit, including the Azurite Field, in the Republic of Congo.

The acquisition adds recoverable reserves of 26 million barrels of oil to PA Resources as well as significant resources associated with a large exploration portfolio.

PA Resources is already present in the Republic of Congo as operator of the Marine XIV block.

"The expected production from the Azurite field, together with our existing production, carry us closer to achieving our production goal of 50,000 b/d," said Ulrik Jansson, president and CEO of PA Resources.

The asset is located in the prolific Lower Congo Basin adjacent to Angola's deepwater Block 14 and the Haute Mer Permit in the Republic of Congo.

The Mer Profond Sud Permit includes the Azurite Marine Field, which was discovered in 2005. The field was appraised by two wells, both of which were sidetracked.

All wells have encountered oil and well AZRM-2ST1 was tested at a rate of 7,893 b/d of oil and 4.63 MMscf/d of natural gas. Recoverable reserves are estimated at 75 million barrels (gross), of which 26 million barrels are net to PA Resources.

The Field Development Plan was approved by the Congolese Ministry of State and Ministry in charge of Hydrocarbons, in June 2007 and contemplates development via a spread-moored floating drilling, production, storage and offloading vessel with subsea wells.

Expected production start is in the second quarter of 2009 with an expected peak production of 40,000 gross b/d of oil of which 14,000 b/d of oil are net to PA Resources.

The purchase price amounts to US$110 million plus an additional carry of approximately US$23 million for two exploration wells. Additionally, the parties have agreed on a performance related price adjustment to be settled one year after the start of production.

The financial consolidation into the PA Resources Group will take place during the first quarter 2008. The acquisition is subject to normal regulatory approvals by the Congolese Ministry of State and Ministry in charge of Hydrocarbons. PetroAdvisor has acted as advisor for PA Resources in the acquisition process.

Murphy West Africa Ltd., a division of Murphy Oil Corp., retains a 50 percent share in the permit as well as in the Azurite field and will remain operator.

Partners include PA Resources (35 percent participating interest) and Société Nationale des pétroles du Congo (15 percent participating interest).