In an official letter of offer addressed to PetroSA, (the South African parastatal petroleum company), a copy of which was delivered to EnerGulf by the Ministry, the Ministry informed the parties, that the exploration license for Block 1711 will be issued, upon acceptance of the offer, as per the following interests: PetroSA 70% and operator, EnerGulf 17%, Namcor 10% (the Namibian parastatal petroleum company) and local BEE group(s) 3%. Under the terms of the offer, PetroSA will be solely responsible for carrying Namcor and the local BEE group(s) during the exploration phase.
The minimum exploration work required by the Ministry, as stated in its offer, is a detailed technical review, seismic reprocessing and site surveys, with a minimum exploration expenditure of US $700,000. Upon acceptance of the offer, EnerGulf's financial commitment is 17% of such amount and all exploration and development costs thereafter.
The Ministry's letter includes an invitation to the parties to the exploration license signing ceremony scheduled for November 17, 2005.
Block 1711 lies on the international boundary with Angola and has two defined hydrocarbon exploration prospects, the Kunene and Hartmann, identified by extensive 3D and 2D seismic data on the 8,931 sq. km Block. Reference is made to EnerGulf's news release of August 17, 2005 with respect to the geological setting of the prospects.
Commenting for EnerGulf, Chairman of the Board, Jeff Greenblum stated, "We are extremely pleased to be selected by the Ministry of Mines and Energy of the Republic of Namibia to participate in Block 1711. We are fully prepared to accept our interest and begin the exploration program on Block 1711. The hydrocarbon potential of this area is very important to the people of Namibia and we are honored to have a role in the exploration of this highly prospective concession. We thank the Ministry for their efforts and diligence throughout this process and look forward to working with PetroSA and the other parties to realize the potential of Block 1711."
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