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Panoro Energy: Completion of farm-out agreement of blocks BM-S-63, BM-S-71 and BM-S-72 in the Santos Basin, offshore Brazil

Santos Basin, Offshore Brazil

26th December 2011

Panoro Energy ASA (“PEN”, OSE ticker code), the independent oil and gas company with assets in West Africa and Brazil is pleased to announce the completion of the farm-out of blocks BM-S-63, BM-S-71 and BM-S-72 in the Santos Basin, offshore Brazil to Vanco Brasil Exploração e Produção de Petróleo e Gas Natural Ltda, a wholly owned subsidiary of Vanco Overseas Energy Ltd (“Vanco”).

In January 2011, Panoro Energy announced that the Company had reached agreement to farm out 35% of Panoro's 50% interest in its three shallow water exploration licenses BM-S-63 and BM-S-71 and BM-S-72.

With the completion of the transaction, Panoro Energy has now received USD 14.5 million for historical costs on the blocks. Furthermore, Vanco will finance Panoro's remaining 15% share of drilling costs for three exploration wells, one on each license.

The drilling campaign on these licenses is expected to start during H1-2012 comprising the drilling of the Sabiá, Canario and Jandaia prospects.

Brasoil also farmed-out its interests in BM-S-63, BM-S-71 and BM-S-72.

Stellar was the sole advisor to Panoro and Brasoil for this transaction.