San Leon Energy on Thursday said authorities approved the assignment of interest in the Foum Draa offshore licence in Morocco as part of the oil company's farm-out agreement with Cairn Energy.

Cairn has assumed operatorship of the block and plans to drill an exploration well. The company purchased a 50% operated equity interest in Foum Draa from partners San Leon, Serica Energy and Longreach Oil and Gas Ventures.

San Leon Energy now holds a net operated interest of 14.17% while Serica owns 8.33% and Longreach has a 2.5% stake in the Foum Draa Block.

Carin will pay $1.5m of its equity interest share of past costs, including $850,000 to San Leon, for the holding. The group will also inject the first $60m towards drilling of the well.

"We would like to thank the Moroccan authorities for their approval of this transaction which now clears the way for the drilling of our first exploration well offshore Morocco," San Leon's Executive Chairman, Oisin Fanning, said.

"Depending on rig availability the current target is to drill the well this year. This block contains mapped prospects and the farm-out agreement reduces our financial exposure but keeps our interest at a level which still offers attractive upside for our shareholders."

San Leon's shares rose 3.02% to 8.01p at 13:07 Thursday.

RD

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