Plains Exploration and Production Company ( PXP ) has entered into an agreement, worth $15 million, with Pura Vida Energy ("PVD") to participate in an exploration play based in the Mazagan permit area of the offshore Morocco. Closure of this contract is subject to the Moroccan government approvals.
Per the contract, Plains Exploration and Production will get a 52% working interest to operate in the 2.7 million acre Mazagan permit area and rights to carry out some specific exploration activities. In addition, the company is expected to drill two more wells and carry on additional exploration activities in this area in the future subject to an investment of up to $215 million. The first well will mainly target the Toubkal prospect and is anticipated to be drilled in 2014. The second exploration well will target a prospect, which will be mutually agreed upon by both the parties.
Australia-based Pura Vida Energy is building a portfolio of high quality assets in Africa. Currently, the company operates in the offshore Morocco with strong resource prospects deriving full funding from a multi-well drilling program.
The Mazagan permit area is located at the coast of Morocco in the Essaouira Basin. Per the recent 3D seismic data, it has a number of mid Miocene and lower Cretaceous prospects. Another source indicates that this area can generate gross unrisked mean prospective recoverable resource of over 7 billion barrels, including 1.5 billion barrels from the Toubkal mid Miocene prospect.
At present, global oil and gas companies are teaming up with local players to discover unexplored reserves in Asia and Africa. In December 2012, oil and gas industry major ExxonMobil Corporation ( XOM ) entered into a contract with an affiliate of Impact Oil and Gas Ltd. for the exploration of oil at the coast of South Africa. Per the agreement, ExxonMobil will take over a 75% stake in the Tugela South Exploration Right from Impact.
This contract is Plains Exploration and Production's first major venture outside the U.S. The company had a cash balance of $217.0 million as of September 30, 2012, and cash from operating activities of $415.6 million in third-quarter 2012. Plains Exploration and Production's financial comfort lends it enough support to sign a foreign-pact, which will subsequently enable the company to strengthen its international presence.
Houston, Texas-based Plains Exploration and Production Company, engages in acquisition, development, exploration and production of oil and gas properties, primarily in the U.S. With a market capitalization of $6.13 billion, the company having 880 full time employees has a short-term Zacks #3 Rank (Hold).