Taipan Resources Inc. (Taipan or the Company) reported Monday that it has entered into a non-binding letter of intent dated July 29 (the Letter of Intent) with Petroleum Exploration Limited (PEL) to acquire a 50 percent interest in PEL's Block 2769-13 (Salam) (the Interest) located in the Jacobabad and Ghotki Districts of the Sindh Province in Pakistan (the Transaction).
Commented Maxwell Birley, CEO "Taipan believes that this Transaction will provide Taipan with immediate exposure to a prospective, low risk exploration well in a province adjacent to existing producing fields. Significantly it would also bring a relationship with PEL offering access to additional production and exploration opportunities and a partner with the capacity to finance such projects. Having PEL and, in particular the Zaheeruddin family, positioned in Taipan as strategic investors would be a step towards our goal of building a production-focused oil and gas company with diversified interests in emerging oil and gas jurisdictions."
PEL is part of the Shahzad Group of Companies, a diversified Pakistan-based conglomerate with a wide spectrum of interests including onshore/offshore oil & gas exploration and production, power generation; mineral exploration & development; oil & gas field services, supply of oil & gas equipment and materials; information technology; security; telecommunication; and trading. The Group has been instrumental in bringing a number of multinational companies to Pakistan, attracting substantial profitable investment and significant Oil & Gas discoveries.
The Shahzad Group of Companies is wholly-owned by the Zaheerudin family, who have interests both within Pakistan and abroad and who are active in a broad range of Pakistani social initiatives and charities.
Pursuant to the terms of the Letter of Intent, Taipan will acquire the Interest in exchange for the issuance of such number of Taipan common shares as is equal to 50 percent of the outstanding Taipan common shares (the Consideration Shares) following completion of the Transaction (which is at arm's length). Prior to completion of the Transaction, Taipan intends to consolidate its outstanding common shares on a 10-for-1 basis (the Consolidation). In addition to the Consideration Shares, Taipan will agree to pay a $1,000,000 discovery fee to PEL within 120 days of a commercial discovery that meets certain agreed to parameters and will pay a $1,000,000 production bonus upon commercial production on the Salam Block.
Taipan will be liable for its pro rata share of all costs of exploration on the Salam Block, including the expected $5,000,000 (gross) in drilling anticipated to be completed on the Ibrahim Well, the first well to be drilled on the Block. Taipan will not be liable for any past costs associated with the Salam Block. PEL will retain operatorship of the Salam Block. PEL has also agreed to grant Taipan the following two options for a 12 month period following execution of the definitive agreements (the Definitive Agreements) for the Transaction: (a) an option or a right of first offer to acquire, subject to agreement on mutually acceptable terms, a 10 percent gross interest in the 940 square mile (2,435.4 square kilometer) Sukkur Block, of which PEL has a 41.18 percent non-operated interest; and (b) an option or a right of first offer to acquire, subject to agreement on mutually acceptable terms, a 20 percent gross interest in the 991 square mile (2,568.16 square kilometer) Mirpur Khas West Block, of which PEL has a 100 percent operated interest.
The Salam Block is situated in the Central Indus Basin and covers an area of 73 square miles (200.22 square kilometers). It lies between 4 producing fields; Qadirpur, Khandkhot, Khandkot West and Badar..
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