Under the first agreement ("Agreement A"), Aurelian will increase its participation in certain parts of three of its existing Concessions EIII-1 ("Brodina"), EIII-3 ("Cuejdiu") and EIII-4 ("Bacau"). Under the second agreement ("Agreement B"), Aurelian will farm into the eastern part of the Concession EPI-3 ("Brates") currently held by Europa and Moravske naftove doly a.s. ("MND").
In more detail, Agreement A provides for:
--Aurelian is to acquire the whole of Europa's 28.75% interest in the Bilca gas production project in an area carved out of the northeast corner of Brodina Concession for a cash consideration of £2.0 million, together with further consideration of £500,000 contingent upon Bilca gas production reaching certain thresholds. Aurelian's percentage interest in the Bilca gas production area will as a result increase to 62.5%. Aurelian's stake in the remainder of the Brodina concession will remain at 33.75%. --Aurelian will farm into Europa's 28.75% interest in Cuejdiu by paying a 18.75% share of the next €2.32 million of costs on the concession, which will include the drilling this summer of the Boistea-1 well. Aurelian will acquire 11.25%, bringing its interest in the concession to 45% and leaving Europa with 17.5%. --Aurelian will farm into Europa's 47.5% interest in Bacau by paying the whole of its 47.5% share of the next €2.32 million of costs on the concession, which will include the drilling in late summer 2007 of a well. Through this Aurelian will acquire 28.5%, bringing its interest in the concession to 81% and leaving Europa with 19%.
Aurelian is in discussion with S.N.G.N. Romgaz S.A. ("Romgaz") that could lead to Romgaz acquiring a part of the interests acquired under Agreement A.
In more detail, Agreement B provides for:
--Aurelian to farm into a defined eastern part of Brates by paying a 60% share of the planned re-drill of the shallow section of the Costisa-1 well, which was drilled in 2006 and in which gas shows were encountered but not tested. This re-drill is expected to commence within the next few days. Aurelian will participate in the re-drilled well and earn as it spends at the rate of one percentage point interest for every €67,340 which it expends through the first €840,000 of gross expenditure and one percentage point interest for every €44,890 expended thereafter. Following the re-drilled well, Aurelian will have the option to continue earning at the rate of €44,890 per percentage point interest until the gross total expended has increased to €2.32 million. Assuming Aurelian exercises this option and €2.32 million is expended, Aurelian will have earned approximately a 27.25% interest in the eastern part of Brates. --While Europa will operate the drilling of the Costisa-1 re-drill, Aurelian will, subject to reaching agreement with MND and the consent of the Romanian authorities, become the operator of any development.
Certain other aspects of both agreements may be subject to the consent of joint venture partners and the Romanian authorities.
Aurelian Oil & Gas PLC, was founded in December 2002 by current Managing Director, Michael Seymour. The Company's strategy is to explore for, appraise, develop and produce oil and natural gas reserves focused in Central Europe.
Aurelian Oil & Gas currently has projects in three countries with a diverse range of risk profiles. In Romania the Company is operator and holds interests, before this announcement, in four blocks; Brodina (33.75%) Cuejdiu (33.75%), Bacau (52.5%) and Suceava (50%). Aurelian also produces gas from the Bilca gas project on the Brodina block where production commenced in 2006. In Bulgaria Aurelian has a 75% interest in and is operator of the B-Golitza and B1-Golitza Blocks, whilst in Poland Aurelian is the operator of the Pozan East gas appraisal project with a 90% interest.
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