TSU NewsTranseuro unit, Oil Search to complete seismic program
2009-04-23 06:06 ET - News Release
Also News Release (C-EWD) Eaglewood Energy Inc
Mr. David Worrall reports
TRANSEURO ENERGY CORP.: UPDATE ON EAGLEWOOD ENERGY
TranseuroEnergy Corp.'s subsidiary company, Eaglewood Energy, has issued a pressrelease concerning farm-out activity on its licences in Papua NewGuinea.
On Oct. 1, 2007, Transeuro announced the closing of thetransaction to sell four exploration licences in PNG to Surge ResourcesInc., which later changed their name to Eaglewood Energy. The summaryterms of the transaction are:
- Transeuro holds approximately 52 per cent of the issued and outstanding share capital of Eaglewood Energy, subject to a three-year value security escrow agreement under TSX Venture Exchange rules with releases occurring every six months following the closing of the transaction.
- Transeuro holds a pre-emptive right to acquire up to 50 per cent of the securities to be issued by Eaglewood pursuant to any financing of Eaglewood involving the issuance of common shares or securities convertible into common shares completed within two years from the closing of the transaction.
- Transeuro will be granted a back-in right whereby, after Eaglewood has drilled and tested three exploration wells on the licences, Transeuro may elect to acquire a 10-per-cent working interest in the licences by paying to Eaglewood an amount equal to 10 per cent of the exploration and development costs incurred up to that date.
The Eaglewood release stated that:"Eaglewood Energy Inc. has entered into a binding farm-out agreement inrespect of PPL260 in the Papuan basin fold belt, one of Eaglewood'sfour 100-per-cent-owned exploration licenses in Papua New Guinea. Thefarm-out agreement is with Oil Search (PNG) Ltd. (OSPNG), a subsidiaryof Oil Search Ltd., a company listed on the Australian Stock Exchange.OSPNG is the most active energy company in Papua New Guinea, andcurrently operates all the existing oil and gas production facilitiesin the country.
Under the terms of the farm-out agreement, OSPNGwill pay Eaglewood $1.5-million (U.S.) and will complete the requiredseismic program at its sole cost by June 30, 2009, to earn a10-per-cent interest in PPL 260. OSPNG and Eaglewood plan to shootfurther seismic in PPL260 at an estimated cost of $1.6-million (U.S.)of which Eaglewood's share is expected to be approximately $800,000(U.S.). After the completion of all the seismic work, OSPNG will have athree-month period in which to elect to earn an additional 60-per-centinterest in PPL260 in exchange for paying 90 per cent of the cost ofdrilling an exploration well. PPL260 is on the same trend as themulti-TCF Hides and Juha gas fields which will be providing themajority of the gas for the $12 billion ExxonMobil led LNG projectplanned for first production in 2013.
The farm-out agreement issubject to certain conditions precedent, including receipt of Papua NewGuinea government approval to the farm-out and amendments to the workcommitments under PPL260.
Eaglewood's chief executive officer,Brad Hurtubise, commented: "While our business plan is to farm outinterest in our licences to generate activity and reduce costs, westill intend to maintain a significant equity ownership in ourlicences. This farm-out is the first of four we are trying to finalizewith various parties this year. We are delighted to have completed thisagreement with OSPNG and to have them as our partner, given that theyare a high quality operator with significant in-country expertise."
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