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Tuesday, August 19, 2014
Cygam Energy Inc. received approval from the Tunisian authorities for the extension of the Sud Tozeur permit in Tunisia. The company, with the support of ETAP, applied to the Ministere de l’Industrie de l’Energie et Des Mines (DGE) in March to extend the permit into the First Renewal Period of three years with an expiry date of May 12, 2017.
As conditions of the extension, Cygam has agreed to the acquisition of 500 sq km of 3D seismic to replace the previous 200 sq km commitment, the drilling of one exploratory well, and the payment of a penalty of $5.0 million. Approval of the extension and associated terms was received on August 14 from the Comité Consultatif des Hydrocarbures. The payment terms of the penalty are yet to be negotiated with, and approved by, the Tunisian Ministry of Finance.
In April 2014, Rigo Oil, a wholly owned subsidiary of Cygam, entered into a Sale and Purchase Agreement with YNG Exploration Ltd., a private company, whereby YNG will acquire Rigo’s 100% interest and all associated commitments in the onshore Sud Tozeur exploration permit in Tunisia. In the event that completion of the transaction does not occur by September 30, 2014, either party may terminate the agreement with a 10 day notice.
The transaction is subject to a number of terms and conditions being satisfied including: extension of the permit into the First Renewal Period of three years; carryover and potential increase of the current 3D seismic acquisition commitment into the First Renewal Period; payment of the Penalty in lieu of the undrilled commitment well with this payment being deferred and paid in installments on terms to be agreed with the Tunisian government and Tunisian government approval to transfer the permit to YNG. Compensation to Rigo will consist of YNG paying a total of $2 million of Rigo’s previously mentioned penalty. It is expected that YNG will pay the first and final $1 million installment of the penalty to the Tunisian authorities on Rigo’s behalf. Rigo will retain responsibility for the remaining $3 million of the Penalty installments which, for Rigo, are anticipated to commence in 2015.
Having now received approval of the extension of the permit, work commitments and penalty, the company will now seek approval from the Tunisian authorities for the deferred Penalty payment installment schedule and the transfer of the Sud Tozeur permit to YNG.
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