Aminex Petroleum Egypt Ltd. has concluded a farm-out of a 20% interest in WEEM to Groundstar Resources Ltd. of Calgary. Groundstar has committed to fund 40% of the financial obligations under the WEEM Production Sharing Agreement up to a ceiling of $9 million ($3.6 million net to Groundstar) in order to earn a 20% working interest. In addition to Aminex, shareholders in APEL are First Energy Pty Ltd., PetroSino Ltd and FS International Corporation.
Under separate arrangements involving the original shareholders of APEL (formerly known as Red Sea Petroleum Ltd.), First Energy has been acquired jointly by Volant Petroleum Ltd., an Australian public company and by Karl Thomson Group of Hong Kong. As part of these arrangements Aminex will reduce its beneficial shareholding in APEL to 12.5%. Aminex's 12.5% share of the exploration costs for APEL's 80% interest in WEEM will now be carried through to first commercial production, free of any financial commitment. This equates to a carried interest of 10% in the WEEM concession.
The WEEM Production Sharing Agreement calls for three exploration wells to be drilled in the initial three year period. The concession has been formally approved by President Mubarak of Egypt and the initial period will commence as soon as formal signing has been completed with the Egyptian Minister of Energy, expected to be in the near future.
The WEEM license covers 1,328 sq. kilometers and lies in the southern portion of the well-established Gulf of Suez petroleum basin. Five producing fields are located on the adjacent block to the south-east, operated by Lukoil Overseas and currently producing approximately 12,000 barrels per day in aggregate. Oil and gas pipelines with surplus capacity are situated close to WEEM.
Commenting on the announcement Aminex Chief Executive Brian Hall said: "We are very pleased to welcome Groundstar as a partner in the WEEM concession. The arrangements with our fellow founding shareholders in APEL leave Aminex with a carried interest in a highly prospective area for exploration without financial exposure to primary exploration risk. There is existing 3D seismic over the WEEM concession and drilling is anticipated to commence in 2007."
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