Ugandan government on Thursday said it did not recognize Ophir Energy, the London-based Oil and Gas Company that recently bought the entire assets of Dominion Petroleum, the East African explorer.

Honey Malinga, acting commissioner for the Petroleum Exploration and Production Department, said:  “We are aware Dominion Petroleum Uganda’s parent company was acquired by Ophir but we were never notified and neither did we clear the transaction.”

Malinga said Dominion, which agreed to Ophir’s takeover in October last year in a $186 million deal, owns one exploration block licence in Uganda.

On July 27 2009, Dominion Petroleum signed a Production Sharing Agreement with the government of Uganda, which granted it exclusive rights to explore the 510 square kilometre area. However, the company later sold its assets including the exploration rights to Ophir Energy.

It is believed that the takeover process began in October last year when Dominion Petroleum issued its entire share capital on UK’s Alternative Investment Market, the London Stock Exchange’s global market for smaller and growing companies.

An official report by Ophir Energy confirms that it fully acquired the assets of Dominion Petroleum in an all-stock transaction in February this year.

The assets listed in the report comprise exploration areas in Uganda, DR Congo, Kenya and Tanzania, all measuring 23.812 square kilometres, an acquisition that promptly made Ophir Energy one of the largest exploration companies in the entire East African region.

But while the transaction would have automatically meant a takeover of Dominion Petroleum asset including its exploration rights in Uganda, government has said it still recognizes Dominion Petroleum as the rightful operator in Exploration Area 4B.

Gloria Sebikari, the Communication Officer at the government’s Petroleum Exploration and Production Department (PEPD) said any transfer of license through sale of assets required government approval.

She, however, did not explain reasons for the delay to approve the transaction but added that they were aware Dominion Petroleum still had a valid license until 2013.

Malinga however said that Dominion Petroleum had revoked their work program and budget for their third exploration period and subsequently submitted a notice to surrender the license.

In 2010, Dominion drilled the Ngaji-1 well to a total depth of 1,765 metres but did not identify hydrocarbons, a material that signals presence of oil.

Last year, on April 27, the company applied for the renewal of the exploration license for the third two-year period, which expires in July 2013.


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