Tethys Oil, through its wholly owned subsidiary Tethys Oil Oman Onshore Limited, has entered into an agreement with Medco Arabia Ltd ("Medco"), a wholly owned subsidiary of PT Medco Energi Internasional Tbk of Indonesia, whereby Tethys will acquire a 45 percent interest in the exploration and production license covering Block 56 onshore Oman. The transaction will increase Tethys' interest in Block 56 from 20 to 65 percent. Tethys Oil will assume operatorship of the block from Medco, who will retain a 5 percent interest in the license. The transaction is subject to government approval.
In consideration for the 45 per cent interest acquired, Tethys Oil will pay MUSD 5 to Medco and will also carry Medco up to MUSD 2 of future expenditure. The agreement further includes additional consideration in the case of a declaration of commerciality under the terms of the license.
Tethys Oil acquired its initial 20 percent interest in the block in the fourth quarter 2019. Block 56 covers an area of 5,808 km2 in the south-eastern part of Oman approximately 200 km south of Blocks 3&4. Testing operations of three previously drilled wells were successfully completed in the first quarter 2020. One of the wells confirmed the presence of an active petroleum system with a crude oil quality of 20-25 degrees API and medium viscosity, although the commercial viability is yet to be determined.
The license for Block 56 is governed by an Exploration and Production Sharing Agreement signed in November 2014, and the exploration phase has been extended until December 2023.
Upon completion of the transaction, Tethys Oil will be the operator and hold a 65 percent interest in Block 56 with Biyaq Oilfield Services holding 25 percent and Intaj LLC and Medco Arabia Ltd holding 5 percent respectively.
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