The Option Agreement, formalizing the exchange of rights between Environmental Remediation Holding Corp and Sao Tome & Principe in the Joint Development Zone between Nigeria and Sao Tome & Principe ("JDZ") also includes the format for an agreement between ERHC and the Joint Development Authority that will administer the JDZ.
ERHC will increase its rights to participate in the JDZ from a total of 30% paid working interest in two blocks to a total of 125% working interest spread over six (6) exploration blocks. Additionally, ERHC will not be required to pay signature bonuses on four (4) of the blocks.
In exchange, ERHC will relinquish its rights to an overriding royalty interest, share of signature bonus and share of profit oil in the JDZ.
Chrome Energy took control of ERHC in February 2001 by acquiring a majority of ERHC's shares. Its principal business since 1997 has been assisting the Democratic Republic of Sao Tome and Príncipe ("DRSTP") in facilitating oil exploration in its offshore waters, in particular:
As a result of these activities and commitments, Chrome was granted certain rights to be awarded working interests in future licensing rounds on favorable terms, a share in DRSTP government revenue from and an over-riding royalty interest in production from the Joint Development Zone between Nigeria and DRSTP ("JDZ"). The rights in the JDZ and EEZ have been set out in an agreement between the Government of DRSTP and CEC dated 21 May 2001, as disclosed in Chrome's 8-K filing of June 5, 2001.
The Treaty that established the Joint Development Zone ("JDZ") between Nigeria and the DRSTP enables the rights arising from the agreement to be respected in the JDZ. These rights are referenced in the final report on the establishment of the JDZ, as required by the Treaty.
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