RE:RE:RE:How does MMT make moneyRead the Annual Information Form for more details on the agreement (p.2).
Acquisition of Interest in Umusadege Field The Umusadege field is an existing multiple-horizon onshore hydrocarbon reservoir situated within the Umusadege farmout area. The Umusadege farmout area is situated in the North Central area of the Niger Delta and formed part of the original of Oil Mining Licence No. 56 and covers an area of approximately 3,771 gross acres. The Umusadege field was declared a Marginal Field pursuant to the Nigerian Petroleum Amendment Act (No. 23) of 1996. On February 25, 2003, the Nigerian Ministry of Petroleum Resources allocated the Umusadege farmout area jointly to Mart’s Co-venturers, Midwestern (70% interest) and SunTrust (30% interest). Midwestern and SunTrust entered into a farmout agreement for such interests on September 30, 2004 with the Nigerian National Petroleum Corporation and Elf Petroleum Nigeria Limited. In November 2006, Midwestern and SunTrust entered into a joint operating agreement, which provides for joint operations on the Umusadege field and appoints Midwestern as the field operator.
Mart (through its wholly owned Nigerian subsidiary, Mart Umusadege) has entered into separate Risk Services Agreements with each of Midwestern and SunTrust that entitle Mart to its interest in the Umusadege field. The Risk Services Agreement between Mart Umusadege and Midwestern was executed on April 26, 2007, and superseded a previous production sharing contract between them executed in April 2006. The Risk Services Agreement between Mart Umusadege and SunTrust was executed on May 22, 2007, and superseded a previous production sharing contract between them executed in May 2006.
Pursuant to the Risk Services Agreements, Mart Umusadege has an interest in the production or revenues from the Umusadege field. Under those agreements, Mart Umusadege contributes to the development of the Umusadege field by providing technical services to the field operator (i.e. Midwestern) and funding all capital costs relating to the exploration and development of the field. As consideration for its services, Mart Umusadege is entitled to an allocation of the net oil sales revenues from the hydrocarbons produced from the Umusadege field or Mart may elect to receive its consideration through the allocation of hydrocarbons produced from the field upon 90-days’ notice to the respective Co-venturers. The allocation of hydrocarbon production or revenues to Mart Umusadege fluctuates between a maximum of 82.5% of total hydrocarbons produced prior to capital cost recovery and a minimum of 50% after capital cost recovery (all after deduction of royalties, taxes, the NDCC levy, operating costs and abandonment obligations). See also “Material Contracts”.
Neither Midwestern nor SunTrust is a related party to Mart. Under the terms of the applicable Risk Services Agreement, Mart Umusadege, Midwestern and SunTrust jointly participate in the exploration, development and3 operation of the Umusadege field; however, other than this common business, Midwestern and SunTrust operate and conduct their affairs completely at arms-length to Mart.