The signing of this agreement forms part of Circle's three-year funding strategy to cover its work program including the development costs of commercial discoveries. The Company is committed to drilling a minimum of 9 wells on its Moroccan and Tunisian Licenses up to the middle of 2009 together with all ancillary seismic and technical studies.
The Convertible Loan is for a period of 5 years, is convertible into ordinary shares of the Company at an exercise price of £0.25 per share and carries a 6% coupon. The contract was signed on 08 June 2007 by Circle Oil plc and a wholly owned Luxembourg registered subsidiary of KGL Petroleum.
Circle is currently finalizing the participation of a number of additional institutional investors and banks in this financing, further announcements on which will be made in due course.
David Hough, CEO Circle Oil, said:
"I am delighted that KGL Petroleum has joined with us in pursuit of our aggressive exploration and development program planned for the coming period. We are also jointly examining working together on a number of other projects which will combine the experience, capabilities and network of both Circle and the KGL Group."
Mohammed Sultan, Managing Director of KGL Petroleum, said:
"After examining a number of possible partners in this sector we are delighted to have concluded this agreement with Circle Oil. We look forward to the future as Circle Oil develops into a successful exploration and production company complementing our other activities in KGL Petroleum."
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