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Cygam Energy Inc. has been advised Pennine was unable to complete a proposed financing due to recent adverse market conditions and has decided to relinquish its participation in the drilling of the Bhayra Rigo # 1 well and surrounding lands in the Jorf permit in Tunisia. Pennine had previously signed an agreement to pay 15% of the seismic and drilling costs to earn a 10% in the Bhayra Prospect. To date, Pennine has paid 15% of the seismic costs and has agreed with Cygam that they will earn a working interest of approximately 2.3% (subject to adjustment based on final costs) in the Bhayra Prospect.
Cygam's remaining three partners in the Bhayra Prospect have all paid their 15% share of the expected drilling costs. Cygam will now pay 55% of the drilling costs and will retain approximately a 67.7% working interest in the Bhayra Prospect. Cygam has adequate net working capital and cash balances to fund its share of the drilling costs.