Pennine Petroleum Corporation (CVE:PNN) reported that it has signed the production sharing agreement for the exploration and advancement of the Velca block with national oil firm Albpetrol. As per the new deal, the company obtains a license for 6-year exploration measures, which upon discovery of natural gas or oil could be moved to a 25-year production lease.
Desmond Smith, the CEO of Pennine, reported that Albania boasts mature energy infrastructure, established regulations and legislation, and a recent history of notable foreign investment for the advancement of its energy division. Pennine will list prospective drilling targets in the block in the imminent two months.
Richard Wadsworth, the Chairman of Pennine, stated that they expect a seamless integration of company into Albania’s gas and oil development and exploration landscape. They consider this agreement offers a balanced risk-and-reward deal for the development and exploration of the Velca Block, and, the company expect numerous other prospects in Albania.
The deal envisages a drilling and an exploration phase. In the exploration stage, Albpetrol and Pennine will examinate all current geophysical, well data and geological on the Velca Block, which will assist pick drilling targets. During the drilling phase, Pennine intends to drill at least two wells with depth of at least 2,500 meters.
In relation to this deal, Pennine will compensate a finder’s fee to an entity through the release of up to 7 million common shares subject to Toronto Stock Exchange Venture Exchange policy. Pennine was chosen the leader of a tender for aground petroleum exploration, production and development in the Velca unit by country’s ministry of energy and industry at the start of December 2015. Key terms and conditions of the reported deal were finalized in February 2016. Albpetrol and Pennine agreed in last April to the terms of the PSA and sent the document for approval.