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Candax Energy farms out major oil and gas exploration to Afren

By on July 26, 2011

Candax Energy Inc. says it has entered into a binding agreement to farm out a major part of its working interest and operatorship of Block 1101 in Madagascar to LSE-listed energy company Afren Plc.

After the transaction, announced Monday, Candax will hold a 10 per cent stake in the property, while Afren will own 90 per cent.

Financial terms were not revealed, although Candax said the deal involves repayment of some back costs and a share of future production royalties.

The transfer of working interest and operatorship have been approved by the Madagascar government, Candax said.

“Although Block 1101 in Madagascar is a very exciting and world-class exploration block, its frontier nature and its sheer size does not fit with Candax’s current focus on optimizing production from our Tunisian assets,” president and CEO Richard Norris said in a release.

“Afren is extremely well positioned to assume operatorship of Block 1101, with an established track record of operating key projects elsewhere in Africa and significant in-house technical resources available to ensure that the acreage is fully explored.”

Candax is an international energy company with its head office in Toronto and offices in Tunis and Madagascar.

Afren is based in London and is listed on the London Stock Exchange. It operates in 11 African countries — from Nigeria and Ethiopia to Kenya, Madagascar and South Africa.

In Monday trading on the TSX, Candax shares rose half a cent to five cents, a gain of more than 11 per cent.