The companies are now considering their options with respect to three Kenya PSCs (in Kenya offshore Blocks L6,L8 and L9) and will conduct an independent review of the survey data and associated data, but believe that the area still has considerable technical merit.

A proposed merger/sale deal between Afrex and Pancon is also under a cloud.

PSCs L6, L8 and L9 cover an area around 21,254sq.km, predominately offshore Kenya, in water depths less than 500m with the deepest water reaching 1,500m. Afrex and Pancontinental will now meet with the Kenyan government to discuss the future of the project and to review exploration commitments.

Under the terms of the staged agreement, Woodside as operator was to shoot at least 2,000km of 2D seismic to earn 50% of PSCs L6, L8 and L9.

The company would then elect in respect of each PSC to drill, and if warranted test, one well to increase its interest to 65%, or hand the 50% interest in that PSC back to Pancon and Afrex.

The Afrex/Pancontinental JV is also finalising its formal arrangements with the Eritrean Government for the offshore Massawa PSC and with the Moroccan Government for a Reconnaissance License for offshore Moroccan permits.

Pancontinental is now reviewing its proposed acquisition of Afrex as the withdrawal of Woodside has had an impact on the value of the Kenya project that forms part of the assets being acquired in the transaction.

An independent valuation had ascribed a value of $10.7m to Pancontinental’s Kenya interest and $16.1m to Afrex’s Kenya interest. As a consequence of Woodside’s withdrawal, this asset will now be revalued.

The valuer had placed a total value of $29.1m on the assets to be acquired from Afrex and valued Pancontinental’s Australasian interests at $2.6m with its African interests at $20.4m.

Pancontinental shares have been savaged by the announcement, trading at 6.9c today after closing at 15.5c on Friday afternoon.