Key acquisition....the famous 'Block Seven'!
Lutfur Khan's Panorama Petroleum Inc. (PPA: halted), up four cents to 26 cents, had an interesting day. An hour before it halted trading, pending news, it announced a memorandum of understanding to acquire State Petroleum Overseas Inc. for its block 26 oil asset in Sudan. If the names sound familiar, that is because State, Sudan and Mr. Khan were mentioned in the Energy Summary just last Wednesday, after African news outlets began reporting that Mr. Khan's State Oil Company Canada Ltd. (part of the Khan-founded State Group) had signed an exploration and production contract for block 26 with the Sudanese government and a Nigerian company. The deal involved no public Canadian companies, but was nonetheless intriguing because of Mr. Khan's history in Sudan, as a key player in Terry Alexander's infamous Arakis Energy in the mid-1990s. (State Petroleum was the original holder of what became Arakis's Sudanese assets once Arakis acquired it in the spring of 1994.) It turns out that the African news outlets got the wrong State. Rodney Duncan, a spokesman for the group, told Stockwatch today that the actual signatory in the block 26 deal was State Petroleum Overseas, the private company that Panorama Petroleum (of which Mr. Khan is a director and the largest shareholder) is now buying. Both State Petroleum and Panorama are part of the State Group. The terms of the deal have yet to be established, but one can make some guesses because it also turns out that block 26 is simply the new name for block 7, in which State Petroleum has held a 50-per-cent interest for years. In 2012, it signed a memorandum of understanding with Emperor Oil Ltd. (EM), under which Emperor could earn 42.5 per cent of the block (being 85 per cent of State Petroleum's interest) for $400,000 (U.S.) in shares and $3.25-million in staggered cash payments. The deal also required Emperor to prove that it could pay its $15-million share of initial project costs. When Emperor could not prove that, even after extensions to the cost-proof deadline, the deal fell apart. Panorama had a working capital deficit of $4.96-million as of March 31.