Polar Resources Corporation has entered into a letter of intent with Caribe Oil & Gas (COG) for the assignment of a joint venture interest of COG with Dominion Oil (USA) Corporation in an incremental oil project in Barbados; both COG and Dominion are privately-held companies. As a result of the Assignment, Polar will fund 100% of the costs associated with development in order to establish incremental production on the project; the cost of development is estimated to be approximately $500,000. Polar will earn an undivided 35% interest in the incremental production (subject to the gross overriding royalty as contemplated below) until payback of expenses, and reducing to 17.5% following such payback. For greater certainty, Polar will be earning an interest only in the incremental oil production of an existing producing onshore oil field in Barbados owned by the Barbados National Oil Company. Present onshore production from the BNOC field is 850 bopd.
Polar has retained Petrotech Engineering Ltd. to prepare an independent engineering and economic evaluation of the Barbados incremental oil project according to National Instrument 51-101 (Disclosure of Oil and Gas Activities).
To complete the Assignment, Polar will loan $120,000 to COG for working capital purposes, issue 2,000,000 common shares to COG within seven days of TSX Venture Exchange approval to the Assignment and issue another 2,000,000 common shares to COG upon confirmation that incremental production of not less than 100 gross bopd has been achieved. COG will retain a 3% Gross Overriding Royalty on Polar's interest. A finder's fee will be paid in connection with the Assignment.
In addition, Polar will acquire from COG 100% of its rights to any projects secured in the Republic of Trinidad and Tobago, Suriname, Guyana, and Venezuela.
Polar also announces that it has arranged, subject to regulatory approval, a non-brokered private placement of up to 6,250,000 Units at $0.12 per unit for gross proceeds of $750,000 (the "Private Placement"). Each Unit will consist of one common share of the Company and one half of a share purchase warrant of the Company. Each whole warrant will allow the holder to purchase one additional common share of the Company at an exercise price of $0.18 within twelve months following the closing of the Private Placement. A finder's fee will be paid in connection with this Private Placement.
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