EnerGulf Granted 15% Interest in New Petroleum Agreement for Block 1711
Dallas, Texas. June 28, 2013. EnerGulf Resources Inc. (TSX-V: ENG; FSE: EKS) (the “Company”) is pleased to announce that it has been granted a 15% interest under a new Petroleum Agreement (the New PA) recently approved by the Namibian Government for Block 1711, offshore Namibia.
The parties to the New PA are the Government of the Republic of Namibia, Ministry of Mines and Energy, Gazania 148 Investments (“PTY”) Ltd. (“Gazania”) and EnerGulf Namibia Ltd. (“EnerGulf”), a wholly owned subsidiary of the Company. The Operator will be Shaanxi Yuyang Petroleum Technology Engineering Co. Ltd.
Gazania will have a 75% working interest in the 1711 project, EnerGulf will have a 15% working interest and NAMCOR will have a 10% carried interest to production. The New PA replaces in its entirety the 2006 Petroleum Agreement under which the Company participated in the drilling of the Kunene #1 offshore well during 2008 in which hydrocarbons were produced in the well bore, however not commercial.
The New PA and related Exploration License have an initial term of four years commencing June 2013, may be renewed by the Government twice for additional two year periods, and provides for the following work programs and minimum expenditures:
Initial Exploration Period (4 years), the minimum exploration expenditure is US$40,000,000 and the work program includes:
- Acquire at least 2500 square kilometers of 3D seismic lines to image some of the existing prospects in the south-western quadrant of block 1711;
- Process the seismic data via pre-stack depth migration;
- AVO processing for post-rift prospects;
- Optional processing through Reverse Time Migration;
- Acquire sea-floor piston cores over vents identified with side-scan program;
- Procure drilling vessel and drill one exploration well to the base of the syn rift and not less than a depth of 5500m below the sea level
The First Renewal Period (2 years) and the Second Renewal Period (2 years) each have a Minimum Exploration Expenditure of US$40,000,000 and each include the requirement to drill one exploration well to a depth based on the results of the previous wells.
Gazania has provided the Government with the guarantees required to cause the Exploration License to be issued, a $4,000,000 Bank guarantee (equal to 10% of the first period exploration requirement) and a guarantee of performance of the parties obligations. A joint operating agreement (JOA) will be entered into among Gazania, EnerGulf and NAMCOR, which will further define their respective rights and obligations relating to exploration of Block 1711 and, if warranted, production. The JOA will address such matters as any assignments of interests under the PA and License, changes in operatorship, and differences between payment obligations and participating interests in the project to accommodate matters such as cost recoveries and the NAMCOR carried interest. The Company expects to have the JOA settled and exploration under way by early fall, 2013.
Block 1711 is situated in the Namibe basin off the northern coast of Namibia along the international boundary with Angola and covers 8,903 sq.km (2.2 million acres). A prospective resource report for Block 1711 was prepared covering four prospects and nine leads. The report includes a mean estimate of 3,166,000,000 barrels of potentially recoverable oil. (As per NI 51-101 section 5.9, there is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.) The report was prepared by independent oil and natural gas reservoir engineers Netherland Sewell and Associates Inc. of Dallas, Texas, and is available on SEDAR (www.sedar.com) and the EnerGulf website (www.energulf.com).
Jeff Greenblum, Chairman and CEO, comments: We are delighted to have offshore Block 1711 back on track. It is a world-class project with multiple prospects and three independent plays, being geologically similar to the highly successful fields of the Santos Basin, Brazil, nearby offshore Luanda, Angola and Deepwater Gulf of Mexico. We are confident that the quality of our Namibian asset will be proven through the upcoming work programs, and we look forward to working with our new co-venturer and operator to achieve significant hydrocarbon discoveries.”
On Behalf of the Board of Directors of ENERGULF RESOURCES INC.
Jeffrey L. Greenblum
Chairman & CEO