ITALY - OVERVIEW
During November 2010, Orca Exploration Group Inc. signed an agreement with Northern Petroleum (UK) Ltd. to acquire between 70% and 75% of the Longastrino Block in the Po Basin onshore Italy. This acquisition was Orca’s second entry into Italy. In May 2010 Orca acquired a 15% interest in the Petroceltic operated B.R268.RG Permit in the offshore Central Adriatic.
Under the terms of the farm-in with Northern Petroleum, Orca will pay 100% of the costs of the Tosca-1 well up to Euro 4.3 million and 70% thereafter for the drilling phase of the well. If the well is tested and completed, then Orca will earn an additional 5% by paying 100% of the testing costs up to Euro 1.3 million and 75% thereafter. The Company will also pay back costs of Euro 0.6 million.
Earlier in 2010, Orca committed approximately US$13 million to earn a 15% interest in the Petroceltic operated Elsa discovery block and 11 adjacent licenses. The Elsa field has a large volume of known oil in place. Orca is not liable to any costs associated with the drilling of Elsa-2 until a rig contract is signed.