"After the management meetings and field visits, most companies should be in position to complete their technical due diligence," commented Lorrie T. Olivier, Chairman and Chief Executive Officer, "and we would not be surprised if we begin receiving proposals shortly thereafter."
The company has initiated cost cutting programs and a reduction in drilling operations to increase the amount of funds available to sustain the company during the sales process. Gas flaring regulations have complicated the re-initiation of field production, and the company continues to work through the approval process. The company has submitted the application for its amended gas utilization plan to the Ministry of Environmental Protection (MEP) and intends to sign a turnkey contract with a third party to construct and operate a brick manufacturing facility with an incentivized completion date of November 1, 2007. In addition, the company has received a letter from the gas industry department of the Ministry of Energy and Mineral Resources, purporting to revoke the previous decision of the working committee that extended the company's current year permit for gas flaring until November 1, 2007 and increased the permitted flaring allowance to 20 million cubic meters.
"There is considerable doubt whether the gas industry department has the authority to revoke the decision of the competent body, which is the working committee, and we are proceeding on the basis of the working committee's protocol to obtain MEP and local regulatory approvals for our amended gas utilization plan," continued Olivier. "At the same time, we are continuing urgent consultations with the relevant governmental agencies to clarify the status of the approval process and the appropriate resolution of these issues, but we cannot predict when or in what form these issues will be resolved."
There can be no assurance that the tender process for the sale of the company will result in any agreements or transactions. The company does not intend to disclose further developments with respect to the tender process unless and until its Board of Directors has made a decision regarding a specific course of action.
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