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Thursday, September 27, 2012
Emperor Oil entered into an MoU with State Petroleum Overseas to acquire 85% of its 50% working interest in a late stage oil development project in Sudan. The development project is located on Sudan’s Block 7, where state-run Sudapet holds the remaining 50%.
Block 7 contains three discovered oil fields and a host of exploration work has been done on the acreage. Previous work includes 6,071 km of 2D seismic and 430 sq km of 3D seismic.
Emperor plans to bring Block 7 to production by Q1 2013.
In addition to the existing discoveries, the extensive 3D and 2D seismic coverage has identified a number of additional development and exploration targets. The company plans to initially ship the oil by truck while completing a 60-km pipeline tie-in to an existing central processing facility located on the concession which is connected to the export pipeline to Port Sudan.
Emperor will pay State an initial cash payment of $400,000 and also issue it common shares in Emperor equal to 19.99% of the then outstanding Emperor shares. State will also receive a cash payment of $1 million upon execution of an EPSA with the government and another $750,000 upon the spudding of the first well on Block 7. There is also a payment of $750,000 to be made on the first day of the month following the declaration of commercial production and an additional payment of $750,000 when production exceeds 2,000 boepd.
The company is required to provide, to the satisfaction of the government of Sudan and State, its ability to pay its share of initial project costs on or before October 8. Project costs being up to $15 million which includes a $9.5 million bank guarantee to be furnished seven days prior to the signing of the EPSA. The remaining $5.5 million will be used to pay EPSA signing bonuses and any other required fees and other expenses including the work program until the end of the year.
Lutfur Khan, chairman of State says: “We look forward to working with Emperor to fully develop the significant oil resource located in Sudan’s Block 7'. Andrew McCarthy, President & CEO of Emperor Oil states that 'This agreement is a significant step towards Emperor Oil’s goal of becoming an international oil producer.”
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