Under the terms of the concession grant, EnerGulf has agreed to pay a signature bonus to the DRC government of US$500,000 for a 90% interest in the 5 year exploration license and will provide a bank guarantee of an additional US$500,000 towards the work program on the block. Additionally, EnerGulf will be the operator of the block and will carry Cohydro, the parastatal oil company of the DRC, for a 10% interest in the block. The signature bonus will be paid from general working capital. Pursuant to DRC law, the grant requires Presidential decree, which EnerGulf has been informed should be forthcoming shortly.
The Lotshi Block covers approximately 475 square km of the ZBC in the onshore coastal salt basin of western DRC and is contiguous to the highly prospective Cabinda area of Angola. The offshore blocks of Cabinda closest to the ZBC contain the giant (more than 500 million barrels of recoverable reserves) Malongo and Takula field complexes operated by Chevron (S.W. Carmalt and Dr. Bill St. John). Immediately adjacent to the ZBC in onshore Cabinda are several undeveloped shallow oil discoveries in blocks held by Devon, Occidental and ROC. The ZBC is also immediately adjacent to the East-Mibale, Laiwenda-Kinkasi and Muana-Banana fields operated by Perenco. Onshore oil production from the Perenco fields is about 9,000 barrels of oil per day. Offshore production from Perenco and Chevron in DRC waters account for about 18,000 barrels of oil per day.
More detailed information regarding the geology, hydrocarbon potential and proposed work program of the Lotshi Block will be provided in the near future.
Additionally, EnerGulf is in continuing negotiations for further acreage in the ZBC and will provide information as events warrant.
Commenting on the signing of the license, Jeff Greenblum, EnerGulf Chairman of the Board stated, "The signing of the Lotshi Block concession is an important step for EnerGulf as it moves our business plan into its next and exciting phase. We will continue to seek out opportunities of interest while now beginning an aggressive exploration program on this highly prospective property. We thank the Government of the DRC and look forward to continued discussions regarding other areas of the ZBC and to working with them towards successful exploration efforts in the Congo Salt Basin."
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