Cirrus Farms-Out Dutch Interests to TAQA


North Sea
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Cirrus Energy Corporation announced that its wholly owned subsidiary, Cirrus Energy Nederland B.V., has entered into a three well farm-out agreement with TAQA Offshore B.V. ("TAQA"). The terms of the agreement are as follows:

Block Q13b

Cirrus will dispose of a net 30% working interest in the Q13b offshore exploration license. The consideration for the disposition takes the form of a farm-in on a 1.8-for-1 basis relating to costs of the first exploration well on block Q13b with TAQA funding a net 54% of the gross well costs and expenses. Any excess of gross well costs exceeding Euro 15.0 million in the event of a dry hole, or Euro 19.0 million if the well is tested, will be funded by the partners according to their post-farm-out working interests. Upon closing of the farm-out and post EBN participation, Cirrus will fund 5.7% of the first exploration well capital costs up to the stated limits and retain a working interest of 28.5% in block Q13b. Cirrus will remain the Operator.
 
Blocks Q10 and Q16b
 
Cirrus will dispose of a net 30% working interest in both the Q10 and Q16b offshore exploration licenses. The consideration for the disposition takes the form of a farm-in on a 1.8-for-1 basis relating to costs of the first exploration well on either block Q10 or Q16b with TAQA funding a net 54% of the gross well costs and expenses. Any excess of gross well costs exceeding Euro 15.0 million in the event of a dry hole, or Euro 19.0 million if the well is tested, will be funded by the partners according to their post-farm-out working interests. Upon closing of the farm-out and post EBN participation, Cirrus will fund 5.7% of the first exploration well capital costs up to the stated limits and retain a working interest of 28.5% in blocks Q10 and Q16b. Cirrus will remain the operator of both blocks.
 
L8-D Field
 
Cirrus will dispose of a net 15% working interest in the planned L8-D Unit covering the L8-D Field. The consideration for the disposition takes the form of a farm-in on a 1.8-for-1 basis relating to costs of the first appraisal well on the field with TAQA funding a net 27% of the gross well costs and expenses.
 
If a deviated well from the L11-B platform is drilled, any excess of gross well costs exceeding Euro 24.0 million in the event of a dry hole, or Euro 28.0 million if the well is tested, will be funded by the partners according to their post-farm-out working interests, otherwise, if a verticle well is drilled, any excess of gross well costs exceeding Euro 18.0 million in the event of a dry hole, or Euro 22.0 million if the well is tested, will be funded by the partners according to their post-farm-out working interests.
 
Upon closing of the farm-out, equity interest partners in the L8-D Unit are expected to be Cirrus 25.479%, TAQA 15.000%, DSM Energie B.V. 2.880%, Energy06 Investments B.V. 1.341%, EWE Aktiengesellschaft AG 13.400% and EBN 41.900%. Cirrus will fund 14.079% of the first appraisal well capital costs up to the stated limits and remain Operator of the L8-D Unit.
 
Cirrus' President, David Taylor, commented, "I am delighted that Cirrus and TAQA have extended the scope of their joint venture activities with this latest transaction which builds on the currently drilling Q14-3 exploration well. Having TAQA, an established upstream company in The Netherlands, as a partner in three further high-impact appraisal and exploration wells brings substantial benefits to both parties.
 
"For Cirrus, this transaction is in full alignment with our strategy to significantly reduce our risk capital exposure whilst retaining a material interest in the substantial potential value of success. In the current unstable market environment, it is considered especially important to prudently manage cash resources to ensure that Cirrus can participate in an extensive program of opportunities without requiring any further equity or debt financing. Cirrus is particularly well placed in this regard and fully funded for both our ongoing developments and for our current drilling plans through 2009 and into 2010."
 
Paul van Gelder, Managing Director of TAQA in Europe, added, "This is another important step for TAQA, allowing us to explore for more hydrocarbon volumes in the Q blocks close to our existing P15 infrastructure position in the Dutch North Sea. We are pleased to be partnering Cirrus again. Additionally, a successful well on the L8-D Unit could see commercial gas flowing within two years, benefiting all parties concerned."
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