Xtract Energy entered into a further agreement with its Turkish partner Merty Energy. Under the terms of the agreement, Xtract will acquire from Merty a further 16% of the issued capital of its Turkish associate company Extrem Energy A.S., taking Xtract's overall share of the business to exactly 50%, with the other 50% held by Merty shareholders.
Consideration for the transfer is staged payments by Xtract of US $4.9 million to Merty, which will apply US $0.9 million of the consideration to subscribe for 30 million new ordinary shares in Xtract. In addition, Xtract and Merty have each agreed to contribute a further US $2.0 million to Extrem to fund the ongoing work program through to the drilling of an exploration well on the Siraseki license area during the second quarter of 2010. Application will be made for the new Xtract ordinary shares to be admitted to trading on AIM and this is expected to become effective on February 18, 2010.
Further details about the proposed exploration well on the Siraseki license area will be provided shortly, along with an operational update on production and drilling activities in the Sarikiz field and further information about the strategy for the exploitation of other licenses within the Extrem portfolio.
Commenting on the transaction, Andy Morrison, CEO of Xtract said, "The notable increase of our shareholding in Extrem demonstrates the confidence of the Board in the prospects for Extrem and for its significant licence portfolio in Turkey. The acquisition establishes joint control and represents another important step in the transformation of the company from a passive investor into one with more active involvement with its underlying assets."
Xtract holds its shares in Extrem through wholly owned subsidiary Xtract Energy Spain SL.
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