Pacific Asia Petroleum announced that its Hong Kong subsidiary, Pacific Asia Petroleum Energy Limited ("PAPE"), along with its China affiliate, Inner Mongolia Sunrise Petroleum Co. Ltd. ("Sunrise"), signed a series of agreements on enhanced oil recovery and production ("EORP") with various Chinese companies and individuals as envisioned pursuant to the Letter of Understanding signed by the Company and PAPE as announced publicly on May 15, 2009.
The entry into and performance of these EORP-related agreements, including various formation and operating-related agreements and an agreement signed by Sunrise covering several oil fields in Inner Mongolia and the Heilongjiang Province in the People's Republic of China, are anticipated to pave the way for the commencement of production operations this year. As presently provided under the Letter of Understanding and related EORP agreements, the Company shall maintain a minimum 51% interest in PAPE and all the EORP agreements signed going forward.
Additionally, pursuant to a patent assignment agreement, dated June 7, 2009, entered into by PAPE and one of the parties to the Letter of Understanding, PAPE has acquired rights to certain enhanced oil recovery technology in the form of six pending patents and related rights covering chemical enhanced oil recovery, subject to issuance of such pending patent rights by the State Intellectual Property Office of the People's Republic of China.
With these EORP-related agreements signed and in place, the Company expects PAPE to commence operations in these various oil fields in the next calendar quarter and commence production and generation of revenues in the 4th quarter of 2009.
Commenting on these new agreements, Frank C. Ingriselli, President & CEO of Pacific Asia Petroleum, said, "We are pleased that the enhanced oil recovery and production venture we announced last month has now been finalized with the entry into a series of definitive agreements which we anticipate will allow PAPE's commencement of oil field production operations this year. These ventures should deliver revenues and cash flow this year and deliver on our business plan of growing shareholder value through low cost and low risk ventures. Our Company looks forward to working with our Chinese partners to enhance recovery from, and drill new wells, in several oil fields in China. The opportunities we are targeting offer hundreds of wells to add to our production portfolio. We believe that this new business and the technology we have acquired offer great upside for our Company not only throughout China's energy market, but throughout Asia."
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