In May 2013, we completed a 2D seismic data acquisition program on approximately
6,000 line-kilometers, covering Blocks C8, C12 and C13. In November 2013, we completed a 3D seismic
program of approximately 10,300 square kilometers over portions of Blocks C8 and C12. Processing of
this seismic data is expected to be completed in 2014.
We are currently assessing prospectivity on license areas in Mauritania, and accordingly
information concerning prospects, if any, on such recently acquired license areas is not yet available.
We currently are, and plan to continue, processing seismic information to assess the prospectivity for
these license areas.
Morocco (including Western Sahara)
During 2011, we acquired two new petroleum contracts, renewed an existing petroleum contract
and acquired a new reconnaissance contract (which was subsequently converted to a new petroleum
contract) in Morocco. Our petroleum contracts include the Cap Boujdour Offshore block, which is
within the Aaiun Basin, and the Essaouira Offshore block, the Foum Assaka Offshore block and the
Tarhazoute Offshore block, which are within the Agadir Basin. We are the operator of these petroleum
contracts and our initial participating interests were 75%, 37.5%, 37.5% and 75% for the Cap Boujdour
Offshore block, the Essaouira Offshore block, the Foum Assaka Offshore block and the Tarhazoute
Offshore block, respectively.
Aaiun Basin
The Cap Boujdour Offshore block is located within the Aaiun Basin, along the Atlantic passive
margin and covers a high-graded area within the original Boujdour Offshore block which expired in
February 2011. Detailed seismic sequence analysis suggests the possible existence of stacked deepwater
turbidite systems throughout the region. The scale of the license area has allowed us to identify distinct
exploration fairways in this block, which provide substantial exploration opportunities. The main play
elements of the prospectivity within the Cap Boujdour Offshore block consist of a Late Jurassic source
rock, charging Early to Mid Cretaceous deepwater sandstones trapped in a number of different
structural trends. In the inboard area a number of three-way fault closures are present which contain
Early to Mid Cretaceous sandstone sequences some of which have been penetrated in wells on the
continental shelf. Outboard of these fault trap trends, large four-way closure and combination structural
stratigraphic traps are present in discrete northeast to southwest trending structurally defined fairways.
We are the operator of the Cap Boujdour Offshore block. We are currently in the first exploration
period, which was recently extended to March 2014. The exploration phase may be extended up to
eight years from the September 2011 effective date, or to September 2019. In the event of commercial
success, we have the right to develop and produce oil and/or gas for a period of 25 years from the
grant of an exploitation authorization from the government, which may be extended for an additional
period of 10 years under certain circumstances.
In October 2013, we entered into a farm-out agreement with Capricorn Exploration &
Development Company Limited, a wholly owned subsidiary of Cairn Energy PLC (‘‘Cairn’’), covering
the Cap Boujdour Offshore block, offshore Western Sahara. Under the terms of the agreement, Cairn
will acquire a 20% non-operated interest in the exploration permits comprising the Cap Boujdour
Offshore block. Cairn will pay 150% of its share of costs of a 3D seismic survey capped at $25.0 million
and one exploration well capped at $100.0 million. In the event the exploration well is successful, Cairn
will pay 200% of its share of costs on two appraisal wells capped at $100.0 million per well.
Additionally, Cairn will contribute $12.3 million towards our future costs and, upon close of the
transaction, $0.6 million for their share of costs incurred from the effective date of the contract through
December 31, 2013. Completion of the transaction is subject to customary closing conditions, including
Moroccan Government approvals. After completing the transaction, our participating interest in the
Cap Boujdour Offshore block will be 55.0% and we will remain the operator.
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