News Out Mr. Wayne Koshman reports
RIFT BASIN ANNOUNCES FARMIN & PARTICIPATION AGREEMENT
Rift Basin Resources Corp. has entered into a definitive farm-in and participation agreement, pursuant to which the working interest owner of an oil project has provided the company with the right to earn an undivided 50-per-cent working interest in the farmor's producing heavy oil project located in Saskatchewan, Canada.
The project is supported by a resource report prepared in accordance with National Instrument 51-101 -- standards of disclosure for oil and gas activities, providing an evaluation of reserves and prospective resources as at Sept. 1, 2011.
The project consists of 11 heavy oil wells plus one revenue-generating waste water disposal well, located in a proven energy-rich geographical area with significant untapped upside potential. The waste water disposal well that is located on site has the capacity to handle waste water from the farmor's own wells, and to generate revenue from other companies in the area. The wells present an opportunity to maximize production and profits through the application of new and enhanced oil recovery technologies, and are complementary to the company's shallow well redevelopment activities in Indonesia.
In accordance with the terms of the farm-in agreement, the company will earn an undivided 50-per-cent working interest in the project upon the following terms:
- $10,000 payment to the farmor upon execution of the farm-in agreement (paid);
- As mutually agreed to by the farmor and the company, on or before Feb. 1, 2015, the company commences and completes a reactivation program with the objective of increasing production of certain wells and/or reactivation of existing wells;
- Provided that the company has fulfilled its obligations pursuant to the reactivation program and is not in default of any term or condition of the farm-in agreement, the company shall have earned a 50-per-cent working interest.
The acquisition is subject to applicable regulatory approval as required. There can be no assurance that the company's obligations under the reactivation program will be agreed to or completed as proposed or at all.
Indonesian operations
Rift Basin's primary focus and operations continue to be in Indonesia. The company and Grosco International Sdn. Bhd. are proceeding under the terms of their participation agreement, whereby Grosco is financing secondary and enhanced oil recovery methods to develop wells in compliance with contractual obligations with state oil company PT Pertamina EP.
Additional well selection has been undertaken by Dr. Didit Hadianto, a former director of PT Pertamina and current professor at the Institute Technical Bandung (Indonesia's top technical university). An initial 10 wells have been selected for development in the Dandangilo Wonocolo field, with three selected pilot wells. A further 14 wells have been selected in the nearby Ngrayong field. These 24 wells have been prioritized on a technical basis from several hundred historical wells. Additional wells are available, subject to additional data available from Lemigas being reviewed by the company's team.
The company will provide further updates respecting these initiatives as developments occur. There can be no assurance that interests in any or all of these additional projects being pursued will be acquired, financed and/or commercialized.
Financing
The company has arranged a $75,000 non-brokered private placement to cover additional registered office set-up and related costs in Indonesia. The company will offer up to 1.25 million units of the company, with each unit consisting of one common share of the company and one-half of a common share purchase warrant. Each warrant will entitle the holder thereof to purchase one common share at a price of 20 cents for a period of 12 months from the closing of the offering, subject to the acceleration provision described below. The units will be made available by way of prospectus exemptions in Canada and in such other jurisdictions as the company may agree where the units can be issued on a private placement basis, exempt from any prospectus, registration or other similar requirements.
The company will be entitled to accelerate the expiry date of the warrants to the date that is 30 days following the date the company issues a news release announcing that the published closing price of the common shares on the exchange has been equal to or greater than 30 cents for any 10 consecutive trading days after the hold period on the common shares has expired.
The company may pay a finder's fee on the offering within the amount permitted by the policies of the exchange. Closing of the offering is subject to a number of conditions, including receipt of all necessary corporate and regulatory approvals, including the exchange. All securities issued in connection with the offering will be subject to a statutory hold period of four months plus a day from the date of issuance in accordance with applicable securities legislation. The net proceeds from the offering will be used by the company for general corporate purposes, and may be used for the acquisition of oil and gas properties. The company expects to close the offering on or before Aug. 15, 2014.
The farm-in agreement and the offering are subject to exchange approval.