Petroleum Africa
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Tuesday, August 25, 2015
Aminex reported on the reorganization and continuation of its Egyptian interests through a conversion of its carried interest to first production into an overriding royalty position in a recent discovery well.
The company is currently a 12.5% shareholder in Aminex Petroleum Egypt Ltd. (APEL) and, through this shareholding, has an indirect 10% carried interest in the West Esh el Mellahah-2 (WEEM-2) PSC in Egypt.
Four exploration wells have been drilled in the WEEM-2 concession since 2006. The first two exploration wells were abandoned as dry holes and the third well was abandoned after recovering limited quantities of crude oil to surface. The fourth well, South Malak-2 (SM-2), drilled in 2014 as a sole risk well by a fellow participant, resulted in a discovery of oil, which has now been declared commercial.
Until now, Aminex’s interest was free-carried through to first production but if production could be established, Aminex would have been required to meet ongoing license costs and repay its free-carry in full prior to receiving its share of production revenues. The company decided in order to optimize its commercial interest in the discovery, over which it has no operational control, it has agreed to sell its shareholding in APEL to fellow shareholder PetroSino together with its indirect carried interest.
Under the sale terms, Aminex will sell its shareholding in APEL to PetroSino for a nominal sum and in return PetroSino will grant Aminex a 1% gross overriding royalty on the full sales value of its share of production from the SM-2. The royalty commences after recovery of $2.5 million in drilling costs.
Also with the sale APEL’s name will be changed to a name unrelated to the Aminex brand and Aminex will no longer be represented on the APEL board.
Aminex Chief Executive, Jay Bhattacherjee, commented: “The Board of Aminex is pleased with the result of today’s reorganization of its Egyptian interests which provides the best opportunity for the company to achieve revenues from the WEEM-2 concession, with no exposure to further development capital.”
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