Candax Energy Inc CXEYF

Chaal - Why The Permit Was Revoked

[Condor7]

The old Chaal partnership was comprised of three partners with the following percentages:

Candax 60%  - through Falcan Chaal Petroleum Ltd
Mitsubishi 20%
SMIP 20% - SMIP (Societe de Maintenance d'Installations Petrolieres) our resident Government involvement.

The new farm-out deal announced on 11th May 2010 comprised of the following partners and percentages.

Sacoil 55%
Mitsubishi 20%
Candax 18.75%- through Falcan Chaal Petroleum Ltd
SMIP 6.25% - SMIP (Societe de Maintenance d'Installations Petrolieres).

Once the deal was put to the government for sanction and extension of the permit, they probably just laughed as they stamped canceled on it. Look at the figures.

Mitsubishi clearly will not dilute it's holding, and retains it's 20%.
Candax has to give up 41.25 to retain 18.75%.
Sacoil wants a large percentage (55%) of the partnership for it's own business reasons.
If Candax gave Sacoil 55%, we would end up with a pathetic 5%, therefore they reduced SMIP from 20% to 6.25%.
 
Since SMIP is in effect the Tunisian Government, and since they control the permit, this deal was never going anywhere. Did Candax actually agree 6.25% with SMIP prior to the permit extension request? .... or did they just dress up in clown outfits as they submitted it by hand? 

The Tunisian government wants Chaal drilled, but not when they only get 6.5% of the field. This deal may be back on at some point in the future, but my guess is that SMIP will retain 20%, and so the question is, where does that leaves Candax?