DEMOCRATIC REPUBLIC OF CONGO
The Lotshi Block covers approximately 507 square km of the “Les Zones du Bassin C’tier” (ZBC) in the onshore coastal salt basin of western Democratic Republic of Congo (DRC). The block is contiguous to the highly prospective Cabinda area of Angola and is on trend with the M’Boundi giant field in Republic of Congo and situated in a similar geological rift graben. The Lotshi Block is also in relatively close proximity to the offshore Cabinda, Malongo and Takula giant field complexes. Immediately adjacent to the ZBC and contiguous to the Lotshi block, in onshore Cabinda, are several undeveloped shallow oil discoveries in blocks held by Sonangol Group and ROC Oil Company Ltd. The ZBC also includes the East-Mibale, Laiwenda-Kinkasi and Muana-Banana fields operated by Perenco Oil. The eastern boundary of the block is also contiguous to a bitumen mining license, where there are also known surface oil seeps.
On November 16, 2005, EnerGulf Africa was granted a Contrat De Partage De Production (“Production Sharing Contract” or “PSC”) by DRC, for the Lotshi Block, containing 507 square kilometers, lying approximately 33 kilometers from the west coast of the DRC. The PSC granted EnerGulf a 90% working interest and COHYDRO, the National Oil Company of the DRC, (“COHYDRO”) a 10% carried working interest. The Company incorporated EnerGulf Congo to act as the Operator. The PSC was ratified and approved by Presidential Decree on March 12, 2008. The Ministry of Hydrocarbons (“Ministry”) issued a Permis d’ Exploration (“Exploration Permit”) for the Lotshi Block on October 31, 2009. EnerGulf Africa and COHYDRO entered into a Contrat D’ Association (“Joint Operating Agreement”) for the Lotshi Block on February 5, 2009. The PSC and Exploration Permit were made effective as of October 31, 2009 by Memorandum Agreement dated October 25, 2010. The PSC and related Exploration Permit have an initial term of five years commencing October 31, 2009.
The PSC expired on November 1, 2014. On April 3, 2015, the Company received a letter from the Director of the Cabinet of the Prime Minister of the DRC, whereby extending the Exploration Permit for a period of ten months to facilitate the drilling of a well on the Lotshi Block which ended on February 3, 2016. The Company is in discussions to negotiate a further extension to the PSC.