Petromanas Energy Inc. has entered into a definitive farm out agreement (the "Agreement") with a wholly owned subsidiary of Royal Dutch Shell plc, whereby Shell will farm into the Company's rights on onshore exploration Blocks 2-3 (the "Blocks") comprising approximately 852,000 acres onshore Albania. Under the terms of the Agreement, Shell will acquire a 50 percent participating interest in the Blocks in exchange for payments and carried costs up to $50.3 million. Petromanas will continue to act as operator of the Blocks.
"We are very pleased to have Shell as a joint venture partner. They bring exceptional technical capabilities and substantial resources to our new relationship," said Mr. Glenn McNamara, CEO of Petromanas.
"We believe that partnering with a global leader like Shell provides a validation of the potential of our Albanian assets and the exploration work we have completed to date. Our 2012 drilling program remains unchanged and is moving ahead as planned from a position of enhanced strength and we expect the addition of a further seismic program to accelerate the exploration and development of the Blocks."
Under the terms of the Agreement, Shell would carry Petromanas on the following items: a work program up to $22.5 million in the first exploration period and subject to entering into the second exploration period, a second exploration well. Any potential excess costs of the work program over the carried amounts shall be jointly paid by both parties in proportion to their participating interest. In addition, Shell will pay a cash consideration for a total amount of $16.3 million, of which $11 million is refundable to Shell should Petromanas secure a partner for the other Petromanas blocks during the current exploration period.
The Agreement is subject to customary closing conditions including the receipt of all necessary regulatory and government approvals.
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