Africa Oil Corp. has signed a decisive farm-out agreement with Maersk Oil and Gas A/S a subsidiary of Maersk Group.

The agreement allows Maersk to acquire 50% of Africa Oil’s interests in the 10BB, 13T and 10BA Blocks in Kenya as well as the Rift Basin and South Omo Blocks in Ethiopia.

At the end of the transaction, Maersk is to repay Africa Oil $350 million for about 50% of past costs befalling Africa Oil before the 31 March 2015 agreement.

Starting from the effective date of the agreement, Maersk is to also pay $75 million of Africa Oil’s share of development costs as well as $15 million of Africa Oil’s share of exploration costs.

Meanwhile, for the Lokichar Development Project Maersk will pay $405milion of Africa Oil’s working interest share of development costs upon Final Investment Decision (FID).The total amount of costs will depend on the start of progress and the scheduling of first oil.

“We are delighted to have attracted a partner of the stature of Maersk Oil into our East Africa venture. We believe they bring significant technical, financial and infrastructure development capabilities at a critical time when the Lokichar Development and related pipeline projects are moving towards sanction. Their parent company's standing as the world's leading logistical and Transportation Company will provide benefits not only to the project but to the host countries as well. This transaction allows Africa Oil to keep a significant stake in the project with no additional equity financing expected prior to first oil,” Keith Hill, Africa Oil’s CEO said.

The farm-out agreement is subject to the approval of each country’s government as well as relevant regulators, Your Oil and Gas news reports.