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Tuesday, December 7, 2010
Canadian firm East West Petroleum Corp. has entered into an agreement to acquire a 20% working interest in a producing oil field in Egypt from a private firm. In order to complete the acquisition, the company must pay the vendor $17.5 million, of which $3.5 million is being paid as a deposit. The company has organized bridge loans to pay the deposit, for which it will be issuing bonus shares subject to regulatory approval.
The Acquisition will be effective from December 1, 2010. Closing is subject to various conditions including the approval of the TSX Venture Exchange, the completion of a financing, and third party consents, including Egyptian regulatory approval and endorsement.
No further details on who the company was acquiring the stake from were disclosed. Hitherto East West has not held any acreage within Egypt, or Africa, the company does however hold assets in Romania. However, in November East West signed an agreement with Kuwait Energy Company (KEC) for the application of emerging unconventional oil and gas technologies to multiple exploration and producing concessions held by Kuwait Energy in the Middle East, North Africa, and Eurasia regions. KEC holds five properties in Egypt, including three producing assets – Area A, East Ras Qattara, and Burg el Arab. It is very possible that the agreement East West has to acquire assets in Egypt is with KEC, though this is as of yet not confirmed.
East West said that with continued production, the field development lease that it has gained access to can be extended through to 2021onventional oil-bearing reservoirs where the application of unconventional drilling and completion technologies may contribute to increasing the productivity of the producing reservoirs and the overall value of this asset, have been identified.
Greg Renwick, President and CEO commented: "This acquisition marks East West Petroleum's entry into Egypt and is an important milestone in the Company's business plan to expand overseas, build a platform of near-term production, and capture assets whose value can be enhanced through the application of modern unconventional drilling and completion technologies."
Near-term investments will be directed towards appraising the lateral extent of multiple productive zones, development drilling, and re-completions to increase oil production.
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