RE: News out!Sep 28, 2010 09:30 ET
Centric Energy Completes Agreements with Tullow Oil for Farm-Out of Kenya Block 10BA
LONDON, ENGLAND--(Marketwire - Sept. 28, 2010) - Centric Energy Corp. ("Centric Energy" or "the Company") (TSX VENTURE:CTE) announces that the Company and Tullow Oil PLC ("Tullow") (LSE:TLW)have executed the definitive farm-in and joint operating agreementswhereby Tullow will farm-in to a 50 per cent participating interest inCentric Energy's 100 per cent owned Production Sharing Contractcovering Block 10BA in north-western Kenya (the "PSC").The closing of the farm-in is conditional upon the approval of theKenyan Government and satisfaction of conditions precedent which areexpected to be completed within 30 days.
Pursuant to the agreements, Tullow will earn a 50 percentparticipating interest in the PSC and will assume operatorship inreturn for:
- reimbursing 50 per cent of Centric Energy's acquisition costs for the PSC which total approximately US$750,000;
- paying 80 per cent of the first US$30 million of expenditures under the PSC; and
- assuming 80 per cent of the bank guarantees and parent company guarantees during the period in which it is paying 80 per cent of the expenditures under the PSC.
"Centric Energy is very pleased to have the opportunity towork with Tullow Oil on the exploration of Block 10BA," said AlecRobinson, President & CEO of Centric Energy. "Tullow's success andexpertise in a similar geological setting in Uganda will ensure thatBlock 10BA is explored using the most modern exploration technology andin accordance with recognized international environmental standards andprinciples. Centric Energy intends to participate fully with Tullow inthe exploration program."
In addition to the approval of the Kenyan Government,another condition precedent to the closing of the farm-in is theresolution of a judicial review application filed against KenyanMinistry of Energy relating to certain exploration permits granted bythe Ministry, including the Company's PSC.
In the court proceedings, which were brought by Interstate Petroleum Ltd. ("IPL")against the Permanent Secretary, Ministry for Energy, IPL is seeking ajudicial review of the administrative process that led to the issuanceof exploration permits in respect of Block 10BA, among others, whichresulted in Centric Energy being a named party to the proceedings. Apreliminary order, granting IPL leave to seek orders against thePermanent Secretary, has been granted and a hearing date has been setfor October 27, 2010. Centric Energy has been advised by its legalcounsel in Kenya that the courts in Kenya regularly grant this sort ofpreliminary order, also known as "granting leave", in applications ofthis nature as there is no requirement to establish the merit of theclaim on the initial application.
The Ministry of Energy has advised the Company that it cancarry on with its work program and that its PSC remains in goodstanding.
Alec Robinson stated, "Centric Energy believes there is nobasis for the claims that IPL is making against the PermanentSecretary. We understand that both the Permanent Secretary and theMinistry of Energy share our view in that regard. Centric Energy willwork closely with the Permanent Secretary, the Ministry of Energy, theAttorney General's office and other interested parties to ensure thatour interest in the Block is safeguarded."
Block 10BA is strategically located within the East AfricanRift System which is enjoying increasing exploration interest andsignificant recent success, most notably in the Albertine rift inUganda, 660 km to the west, which is considered to be the closestgeological analog to the Tertiary basins underlying Block 10BA (source:Gustavson Associates, "Resource Evaluation Report, Centric EnergyCorporation, Kenya Block 10BA"). Major volumes of hydrocarbons havebeen discovered by Tullow Oil in the Albertine rift, currentlyestimated to be approximately 950 million barrels recoverable as statedin the press release issued by Tullow on July 28, 2010 (https://www.tullowoil.com/index.asp?pageid=137&newsid=672).