Armour Energy recommences exploration in Uganda
10-08-2021 08:58:28 | by: Pie Kamau | hits: 1067 | Tags:

The Board of Directors of Armour Energy announced that exploration activity will recommence on the Company’s oil exploration project in Uganda.

As the Company has previously advised, the Company’s Uganda oil exploration project (the Project) is located within the Albertine Graben which has recorded discoveries of 6.5 billion bbl of oil in place. Armour was awarded the Kanywataba exploration licence by the government of the Republic of Uganda (the Ugandan Government) on 13 September 2017 (EL 1/2017).

EL 1/2017 was renewed on 13 September 2019 for a further period of 2 years2. In October 2020 the renewed EL 1/2017 was transferred to Armour Energy (Uganda) SMC Ltd (Armour Uganda). As at the date of this announcement the ultimate holding company of Armour Uganda is the Company. The Company holds its interest in Armour Uganda through its wholly owned subsidiary, Armour Energy International Pty Ltd (Armour International). However as previously announced3 DGR Global Limited (DGR) has an 83.18% beneficial interest in the Project. In due course so many shares in Armour International will be issued to DGR, that it will hold 83.18% of the issued share capital of Armour International. The Company will hold the remaining 16.82% of Armour International, and Armour International will retain ownership of 100% of the issued share capital of Armour Uganda.

It was a condition of the renewal of EL 1/2017 that the licensee complete a 2D seismic survey during the second term of the licence. However, on 15 October 2019, the Company wrote to the Minister of Energy and Mineral Development of the Ugandan Government (the Minister) declaring that it was suspending work on the 2D seismic survey as a result of severe flooding in the area of operations. This flooding constituted an event of Force Majeure (as defined under the Production Sharing Agreement between the Company and the Government of Uganda (PSA).

In early 2020, the actions taken by numerous governments and businesses in response to the spread of the COVID 19 virus caused severe disruption (and in some cases cessation) of world supply chains and international travel. Accordingly the Company was again prevented from continuing its work on the 2D seismic survey. As previously announced on 9 April 20205 the Company again wrote to the Minister declaring that it was suspending work on the 2D seismic survey as a result of an event of Force Majeure.

The Company has written to the Minister indicating that it will recommence work on the 2D seismic survey. One effect of the two notices to the Minister declaring Force Majeure, is that the periods of time during which the event of Force Majeure prevented the Company from carrying out the 2D seismic survey will be added to the renewed term of EL 1/2017.

Accordingly instead of the renewed term of EL 1/2017 expiring on 13 September 2021, the term of EL 1/2017 will be extended well into calendar year 2022 or 2023. As previously announced6 the Company has contracted with Teclab Limited to conduct the 2D seismic survey of the Kanywataba exploration acreage. The survey is expected to take approximately three months to complete in advance of the wet season.

Armour’s CEO Brad Lingo said, “We see great potential for profitable exploration at Kanywataba, and are very pleased that circumstances now allow us to recommence our activities there.” Updates will be provided to the market as the exploration program at Kanywataba proceeds.

www.armourenergy.com.au