15
Diaba Block Offshore Gabon
Diaman.
On August 19, 2013, we announced that the Diaman #1B exploration well was drilled to a total depth of 18,323 feet
(5,585 meters), and encountered approximately 160 to 180 feet (50 to 55 meters) of net hydrocarbons in the objective pre-salt
formations on the Diaba Block offshore Gabon. The Diaman #1B exploration well successfully confirmed the existence of a working
petroleum system, a salt seal, and high-quality sandstone reservoirs. We and our partners are continuing to analyze additional 3-D
seismic data we acquired over the Diaba block in 2014. The operator currently expects to resume exploration drilling on the Diaba
block offshore Gabon in 2017. We have a 21.25% non-operated working interest in the Diaman discovery. Our partners in the Diaman
discovery include Total Gabon, as operator (42.5% working interest), Marathon Petroleum Corporation (21.25% working interest),
and the Republic of Gabon (15% working interest).
License Information.
We acquired our non-operated 21.25% working interest in the Diaba Block offshore Gabon by entering
into an assignment agreement with Total Gabon. Through the assignment we became a party to the Production Sharing Agreement
(“PSA”) between the operator Total Gabon and the Republic of Gabon. The PSA gives us the right to recover costs incurred and
receive a share of the remaining profit from any commercial discoveries made on the block. We have contractual rights to any form of
hydrocarbons, including natural gas, discovered on our Gabon license area. The Diaba Block is approximately 2.2 million acres (9,100
square kilometers) in size or approximately 370 U.S. Gulf of Mexico blocks. The block is 40 to 120 miles (60 to 200 kilometers)
offshore in water depths of 300 to 10,500 feet (100 to 3,200 meters) in the central portion of the offshore South Gabon Coastal basin.
General Information—West Africa
Geologic Overview
Offshore Angola and Gabon are characterized by the presence of salt formations and oil-bearing sediments located in pre-salt
and above salt (Albian) horizons. Given the rifting that occurred when plate tectonics separated the South American and African
continents, we believe the geology offshore Angola (Kwanza Basin) and Gabon (South Gabon Coastal Basin) is an analog to the
geology offshore Brazil where several pre-salt discoveries are located. The basis for this hypothesis is that 150 million years ago,
current day South America and Africa were part of a larger continent that broke apart. As these land masses slowly drifted away from
each other, rift basins formed. These basins were filled with organic rich material and sediments, which in time became hydrocarbon
source rocks and reservoirs. A thick salt layer was subsequently deposited, forming a seal over the reservoirs. Finally the continents
continued to drift apart, forming two symmetric geologic areas separated by the Atlantic Ocean. This symmetry in geology is
particularly notable in the deepwater areas offshore Gabon, Angola and the Campos Basin offshore Brazil. From an exploration
perspective, we believe this similarity is very meaningful, particularly in the context of pre-salt Brazilian discoveries and our pre-salt
discoveries at Cameia, Lontra, Mavinga, Bicuar, Orca and Diaman.
Licenses
As of December 31, 2015, our working interests in Blocks 9, 20 and 21 offshore Angola and the Diaba Block offshore Gabon
comprised an aggregate 5,652,687 gross (1,840,581 net) undeveloped acres. On March 1, 2016 we will forfeit 988,668 gross (395,467
net) acres associated with Block 9 offshore Angola. We do not currently own any working interests in developed acreage offshore
Angola, although exploration wells have discovered hydrocarbons at Cameia, Mavinga and Bicuar on Block 21 offshore Angola and
at Lontra and Orca on Block 20 offshore Angola. In addition, the Diaman #1B exploration well on the Diaba Block offshore Gabon
was also successful in discovering hydrocarbons. See “Risk Factors—Risks Relating to Our Business—Our discoveries and appraisal
and development projects remain subject to varying degrees of additional evaluation, analysis and partner and regulatory approvals
prior to official project sanction and production.”
