BNK Petroleum has executed agreements with Rohöl-Aufsuchungs Aktiengesellschaft ("RAG") and Sorgenia E&P S.p.A. ("Sorgenia"), to farm-out its 80 percent interest in three oil and gas exploration concessions in Poland (Starogard, Slupsk and Slawno). RAG/Sorgenia will pay BNK a management fee of US $250,000 each month, for the next twelve months, for technical consulting services, and BNK will pay all of the costs attributable to the parties' interests as to the work needed to identify the first drilling location.
If the first well location is identified during the twelve-month term, then the entire US $3 million management fee will be earned immediately. After the first well location is identified by BNK, RAG/Sorgenia will each pay half of 73.33% of the next US $25 million in total exploration costs, BNK will pay 6.667% and BWB Exploration, LLC will pay its 20% share. RAG/Sorgenia will earn a 53.23% interest in BNK's subsidiary Saponis Investments Sp. Z o.o. ("Saponis") which holds the concessions. BWB is owned 60 percent by LNG Energy Ltd., and 40 percent by another independent party.
BNK will remain operator and continue to hold a 26.67% interest in Saponis, which equates to approximately 200,000 net acres to BNK. BNK believes that the preliminary data it has analyzed indicate that the makeup of the some of the shales, within its Polish concessions, are silica rich and appear to have thermal maturities and total organic carbon in a range that could make them successful shale gas projects.
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