Energem Acquires Oil blocks in Mali and Nigeria

Source: www.gulfoilandgas.com 10/6/2005, Location: Africa

Energem Resources Inc, through a wholly owned subsidiary, has acquired the exploration and exploitation rights to oil blocks 12 and 13 in Mali. The sign on bonus for these two Blocks amounts to US$3 million payable within 30 days of signature of the Production Sharing Agreement. The work program requires minimum commitments in respect of seismic and geological work and well drilling amounting to US$11.6 million for Block 12 and US$12.1 million for Block 13. In terms of the Agreement this commitment is required over the initial four year period and is weighted towards year four when first well drilling must be complete.

The award of these Blocks was confirmed by The Minister of Mines, Energy and Water for the Government of Mali and a Production Sharing Agreement was concluded on September 13, 2005. In terms of existing arrangements controlled subsidiary FirstAfrica Oil plc have, subject to a mutually acceptable independent valuation process, a first right of refusal to acquire these Mali properties from Energem. Operating commitments to training and surface taxes per annum total less than US$300,000 per annum per Block.

In Nigeria the Company, through a wholly owned subsidiary, has, in the 2005 Nigerian Licensing Rounds, been awarded oil and gas exploration and production licenses to Blocks OPL 905, 722, 733, 809 and 810. Simultaneously, the Company has entered into two joint venture arrangements in respect of the licence awards. In all instances, the final terms of the Production Sharing Contracts and the operating agreements should be finalized within 60 days from October 2nd, 2005 in which contracts and agreements final apportionment of ultimate profit share will be determined. As technical operating partners, Energem are likely to fund the bulk of the sign on bonuses and development commitment and the final profit participation to be agreed will accrue after the recovery of all such funding.

The awards are subject to the fulfillment of certain conditions including, inter alia, certain minimum work program commitments including completion of seismic surveys and drilling of exploration wells, the conclusion of the relevant production sharing contracts between the Company and the Nigerian National Petroleum Corporation by October 2nd, 2005.

The licenses are granted for a ten year period, subject to satisfactory interim performance, over which period the minimum work program is to be performed. In respect of Block OPL 905, the work program commitment shall total a minimum of US$21.7 million including minimum local content of US$9.5 million and in respect of the remaining Blocks, US$24 million per Block including local content of not less than US$10.3 million per Block.

In respect of Block OPL 905, the Company has entered into a technical operating partnership with Gas Transmission and Power Limited, a Nigerian company, who will participate in the Block's development as a 60% equity partner, the Company retaining a 40% equity participation. In respect of the remaining Blocks, the Company has entered into a technical partnership with New Nigerian Development Company Limited of Nigeria who shall have a 10% participating carried interest and may elect to increase this to a 15% participating paid interest in any or all of these Blocks.


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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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