RE:NEWSScruff wrote: https://ceo.ca/@newswire/valeura-announces-binding-letter-agreement-with-statoil-for-farm-out-on-banarli-licences-in-turkey
Thanks, Here is the paste. What great news to wake up to after watching Hockey. No wonder Jim said in conference call the extra $2mil spent on Y-1 was $ well spent.
Valeura farms out Banarli interest to Statoil
2016-05-16 00:51 ET - News Release
Mr. Jim McFarland reports
VALEURA ANNOUNCES BINDING LETTER AGREEMENT WITH STATOIL FOR FARM-OUT ON BANARLI LICENCES IN TURKEY
Valeura Energy Inc.'s wholly owned affiliate, Corporate Resources BV (CRBV), has entered a binding letter agreement with Statoil Holding Netherlands BV, a wholly owned affiliate of Statoil ASA, for a farm-out agreement for the exploration of the deeper formations below approximately 2,500 metres where overpressure is expected on Valeura's two 100-per-cent-owned-and-operated Banarli exploration licences in the Thrace basin of Turkey. The Banarli Licences encompass an area of 540 square kilometres or 133,840 gross acres near the centre of the basin. The Letter Agreement is subject to satisfaction of certain conditions precedent including the execution of definitive agreements and the approval of the General Directorate of Petroleum Affairs ("GDPA") of the Republic of Turkey for the associated licence interest transfers, which is expected to occur before the end of September 2016.
Under terms of the agreement, Statoil will have the option to earn 50% in the deep formations on the Banarli Licences by investing in an exploration program that includes payments and carried costs of at least US$36 million for Statoil to earn its interest. The actual amount invested to earn its 50% interest may be higher based on the actual agreed work program under the three phases to satisfy the commitments described below. Valeura will operate the deep exploration program during the earning phase under the Letter Agreement. Valeura will retain a 100% interest in the shallow formations in the Banarli Licences.
"We are excited and honoured to have Statoil as a joint venture partner", said Jim McFarland, President and Chief Executive Officer of Valeura. "Statoil is a highly regarded, major international energy company with the technical and financial resources and unconventional experience to make a decisive contribution to the evaluation of the basin-centered gas play potential in the Thrace Basin. Partnering with a global leader like Statoil validates the potential of our assets and the progress we have made to understand the basin and to develop its tight gas resources. By virtue of our retained 100% interest in the shallow formations under the Agreement, our planned shallow gas drilling program on the Banarli Licences is expected to proceed as planned."
TERMS OF THE LETTER AGREEMENT
Under the terms of the Letter Agreement, Statoil will fund the exploration program in the deep formations on the Banarli Licences as follows:
Phase 1 Commitment (2016 & 2017)
Statoil will pay Valeura US$6.0 million as a contribution to back costs incurred on the Banarli Licences upon the approval by the GDPA of the transfer of a 50% interest in the licences to Statoil. At the same time, Valeura will seek GDPA approval to register its 100% interest in the shallow formations.
Statoil will pay no less than US$10 million for the Phase 1 Commitment directed to the drilling, evaluating, completing, fracing and testing of a Phase 1 well to be drilled to the greater of 4,000 metres or a depth that intersects the upper 450 metres of the Teslimkoy formation, with a target spud date by year-end 2016. The actual agreed work program and investment by Statoil for this phase may exceed the minimum amount.
Phase 2 Commitment (2017)
If Statoil elects to proceed to Phase 2, it will pay no less than US$10 million for the Phase 2 Commitment directed to acquiring 3D seismic over the Banarli Licences at a minimum equivalent cost. The actual agreed work program and investment by Statoil for this phase may exceed the minimum amount.
If Statoil elects to exit after Phase 1, it will pay a penalty of US$10 million and relinquish its interest in the Banarli Licences back to Valeura. At that point, Statoil would have invested a minimum of US$26 million.
Phase 3 Commitment (2018)
If Statoil elects to proceed to Phase 3, it will pay no less than US$10 million for the Phase 3 Commitment directed to drilling a Phase 3 well based on the same parameters as the Phase 1 well. The actual agreed work program and investment by Statoil for this phase may exceed the minimum amount.
If Statoil elects to exit after Phase 2, it will pay a penalty of US$5 million and relinquish its interest in the Banarli Licences back to Valeura. At that point, Statoil would have invested a minimum of US$31 million.
At the completion of the Phase 3 Commitment, Statoil would have invested at least US$36 million to complete the earning of its 50% interest in the Banarli Licences. Following the earning phase, Statoil will have the option to assume operatorship of the joint venture.
The parties have an exclusive arrangement until July 29, 2016 to negotiate and enter into definitive agreements, including the farm-out agreement and joint operating agreement. Both parties have received necessary executive and board approvals. There is no certainty that the parties will be able to reach definitive agreements or that the GDPA will approve the licence transfers.
We seek Safe Harbor.