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Thursday, January 4, 2018
Strata-X pre-empted a third party offer to buy out Magnum Power and Gas’ 25% interest in Botswana’s Serowe Coal Seam Gas Project (Serowe CSG). The company elected to pre-empt the offer as its gives it flexibility in developing the resources outside of a restrictive farm-in agreement and grants the company greater optionality to use the value in the Serowe CSG tenement in lieu of shareholder dilution.
The Serowe CSG project is located in the Kalahari Basin CSG fairway, and offsets tenements of Tlou Energy. Strata-X currently holds the tenements through its Botswanan subsidiary, Rhino CBM.
Strata-X expects the final pre-empt agreements to be executed by the end of Q1 2018. During this time, it will initiate environmental surveys and complete an Environmental Management Plan (EMP) for its 2018-2019 drilling and testing program. Upon concluding the EMP,the company will move forward with its program.
To offset pre-empt costs to buyout, Strata-X is actively engaged in farm-out discussions with third parties to sell a non-operated position in the tenements which should defray the cost of pre-empting and a portion of the 2018 exploration program.
The pre-empt offer made by Strata-X will be subject to similar terms and conditions as that made by the third party seeking MPE’s 25% interest in Rhino CBM. The agreement will call for an immediate deposit of AUD$25,000 to Magnum along with execution of the formal Purchase and Sale Agreement (PSA) by the end of February 2018. Upon execution of a PSA and Strata-X’s satisfaction of several closing conditions, Strata-X will pay Magnum AUD$125,000 in cash and grant a 3.5% overriding royalty interest in the tenements net to its 25% bought out ownership. Thereafter, Strata-X will deliver to Magnum, AUD$200,000 within 60 days of closing the PSA along with another AUD$200,000 within 135 days of closing the PSA. The PSA, which has yet to be drafted, will include customary warranties, covenants, terms, and conditions.
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