Pacific Asia Petroleum has signed a Purchase and Sale Agreement with CAMAC Energy Holdings Limited and certain of its affiliates ("CAMAC") to acquire all of CAMAC's interest in a Production Sharing Contract (the "PSC") with respect to that certain oilfield asset known as the Oyo Oilfield. The transaction is expected to close during the first quarter of 2010 and is subject to certain closing conditions.
The Oyo Oilfield is located approximately 75 miles off the Southern Nigerian coast in deep-water. Operation of the Oyo Oilfield is secured through OML 120, an Oil Mining Lease awarded to affiliates of CAMAC in 2002 by the Federal Republic of Nigeria. CAMAC group holds a 60% interest in OML 120, on which the Oyo Oilfield is located, with the remaining 40% held by the field's operator, Nigerian Agip Exploration Ltd, a subsidiary of Italy's ENI SpA (one of the world's largest international energy companies). The Oyo Oilfield is in the final preparation stage for the commencement of production. The Oyo Oilfield will produce into the Floating Production Storage and Offloading (FPSO) vessel, Armada Perdana.
In exchange for all of CAMAC’s interest in the PSC with respect to the Oyo Oilfield, the Company has agreed to pay $38.84 million in cash to retire existing debts and issue common stock to CAMAC equal to 62.74% of the Company’s issued and outstanding common stock.
Frank C. Ingriselli, President and Chief Executive Officer of Pacific Asia Petroleum, said, "The signing of today's agreement with the CAMAC group is a significant milestone in a recent string of new and exciting developments at Pacific Asia Petroleum. In the past three months, not only have we started production and generated our first revenue from our existing energy projects in China, but we have also expanded our early cash flow and high-return strategies outside the Pacific Rim. We have known the CAMAC group since the formation of Pacific Asia Petroleum and have searched for opportunities for the two companies to work together. We have now found that opportunity with a production asset that we believe will deliver substantial additional value to our Company and its shareholders."
Dr. Kase Lawal, Chairman and Chief Executive Officer of CAMAC International Corporation, commented, "Our agreement on the Oyo Oilfield represents the first step of a new, long-term relationship between CAMAC and Pacific Asia Petroleum. We look forward to participating in Pacific Asia Petroleum's existing and future energy projects by becoming a strategic stakeholder in a company that is positioned for growth based on a sound business plan, responsible corporate governance, and high ethical standards."
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