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Panoro signs agreement to partner with BW Offshore on Dussafu in Gabon

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Oilfield Technology,

Panoro Energy ASA has provided an update on the Dussafu Marin production sharing contract (Dussafu PSC) in Gabon.

Panoro has announced that its fully owned subsidiary Pan Petroleum Gabon B.V. has entered into a Memorandum of Understanding with BW Energy Gabon Pte. Ltd. (BWEG), a newly established subsidiary of BW Offshore (OSE ticker: BWO), the leading global provider of floating production services to the oil and gas industry.

Under the terms of the preliminary partnership agreement, Panoro will sell a 25% working interest in the Dussafu PSC to BWEG for a total cash consideration of US$12 million. Panoro will also obtain a capped limited recourse development loan from BWEG to fund expenditures through first oil production.

The transaction is subject to several conditions, including the signature of a definitive purchase agreement with BWEG, the approval of the Gabonese Government and the completion of the separate sale of Harvest Dussafu B.V. to BWEG. It is expected that the transaction will close in the first quarter of 2017.

Post-completion, Panoro will retain an 8.33% working interest in the Dussafu PSC. The total gross capital expenditure to reach first oil in 2018 is expected to be a maximum of US$150 million.

Panoro has noted the separate announcement that BWEG has entered into a sale and purchase agreement with a subsidiary of Harvest Natural Resources (NYSE ticker: HNR) to acquire the entire share capital of Harvest Dussafu B.V., which holds a 66.66% operating working interest in the Dussafu PSC, for total cash consideration of US$32 million.

John Hamilton, CEO of Panoro, said:

“Panoro is thrilled about our new partnership with BW Offshore. This agreement is a significant step forward in the execution of Panoro’s strategy, validating the high quality of Dussafu and unlocking substantial value for our shareholders. This transaction will reduce our financial exposure to first oil, while preserving our ability to benefit from Dussafu’s future success. Furthermore, the transaction strengthens our balance sheet to pursue additional growth opportunities.”

Carl Arnet, CEO of BW Offshore, said:

“We are very pleased to be joining Panoro in Dussafu, and we look forward to working with them and the Government of Gabon to develop Dussafu’s full potential. We believe that our level of planned investment to bring Dussafu into production as soon as possible demonstrates our new commitment to an integrated upstream business, which we see as new source of growth for BW Offshore”.

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