ERHC Energy Inc. rose the most in 22 months after the independent oil and natural gas explorer said it signed a letter of intent to sell a stake in an exploration block in Kenya.
ERHC gained 35 percent, the most since June 2011, to 7.4 cents at 4 p.m. New York time in over-the-counter trading. The shares have declined 1.3 percent this year.
The company and its unidentified “international oil and gas” partner will negotiate terms of a farm-out agreement for Block 11A, Houston-based ERHC said in a statement today. So-called farm-out agreements usually involve a partner paying for drilling expenses in exchange for a portion of a well’s output. Any contract will be subject to government approval.
Tullow Oil Plc, the U.K. explorer that has found billions of barrels in Africa, said in November it had made a second discovery in Kenya, raising prospects that East Africa’s biggest economy will become an oil producer.
ERHC signed a production-sharing contract with the Kenyan government for the 11,950 square-kilometer (4,600 square-mile) block in July, the company said. Block 11A is located on the border of South Sudan.
Daniel Keeney, a spokesman for ERHC, didn’t respond to an e-mailed request to identify the partner.