Pura Vida Energy has reached a conditional agreement with an offshore drilling contractor which will fund a three-well drilling program in the Nkembe block, offshore Gabon, Offshore Energy Today reported.

Under the term sheet, the rig contractor will provide a jack-up rig and fund the costs of the rig for the three-well program anticipated to commence in the second half of 2017 with an estimated duration of 3-4 months, Energy-pedia News informed.

Additionally, it would cover the mobilization costs and operating day rate of the rig, in exchange for a royalty out of production from any fields discovered during the drilling campaign that are brought into production.

The costs to be funded by the rig contractor are approximately $20m.  Pura Vida did not say who the driller was. The company has started discussions with potential partners to secure the remaining funding required and meetings with the regulator concerning the approvals are being scheduled.

The value of the royalty payable to the rig contractor under the term sheet varies depending on the size and production rates of the relevant field(s) discovered during the 2017 drilling campaign, the company said.