Substantial work has been undertaken on the Permits and a number of exciting prospects have been identified.
The offshore-onshore Kerkouane block is contiguous with Grove's 100 per cent owned Pantelleria permits. Together, they represent an area of more than 8,000 square kilometers of world-class hydrocarbon acreage. The Kerkouane block includes the Dougga gas condensate discovery that was made by Shell in the early 1980's.
Chorbane is an onshore block in Tunisia's south eastern coastal area and contains two leads which are adjacent to the Sid el Kilani oil field and on trend with the Miskar and Hasdrubal gas field.
The Permits are to be acquired from Anschutz Overseas Tunisia Corporation ("Anschutz"), a private Colorado company, under a binding purchase and sale agreement which is subject to standard conditions precedent to final closing. Closing is expected shortly upon receipt of documentation from the Tunisian authorities. Formal approval of the arrangement between Anschutz and Grove by the Tunisian Department of Energy and the extension of the work programme is expected shortly. The Permits are supported by a substantial exploration data base built up by Anschutz over the years.
During the life of the Permits, Grove must drill one well within the offshore Kerkouane block and acquire 250 kilometers of 2D seismic over the onshore Chorbane block. Upon completion of these obligations, the Permits will be converted into a production concession and an exploration permit respectively. Grove's partner under the Permits will be Enterprise Tunisienne d'Activités Petrolieres ("ETAP").
As surety for this work programme Grove will provide the Tunisian authorities with a bond which shall be released as work is carried out under the work programmes. Terms of the bond are currently being negotiated. Under the terms of the contracts with ETAP and the Tunisian Government, Grove will not pay income taxes, customs duties or value added tax on oil and gas equipment and is entitled to recover all of its capital and operating costs and share of profit based on a formula that favours Grove during the cost recovery period.
Glenn Whiddon, Chief Executive Officer, stated: "Over the past six months we have pursued the Permits firstly to secure control over what we believe to be very prospective acreage, and secondly to expand our position in the region. Tunisia's geology and its fiscal and permitting regimes make it one of the best places to explore for and produce oil and gas in North Africa."
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