Bontan Corporation announced that it and its indirect majority-owned subsidiary, Israel Petroleum Company, entered into an agreement on March 24, 2010 with Emanuelle Energy and IDB-DT Energy (2010) for approximately $16.1 million of new financing to assist in further developing a natural gas exploration project offshore from Tel Aviv, Israel.
The Agreement also settles the litigations amongst IPC, PetroMed Corporation, Bontan and their respective affiliates relating to ownership of the 95.5% interest in the "Sarah" and "Myra" drilling licenses, and the now expired "Benjamin" drilling permit (the "Permit"), acquired by IPC from PetroMed in November 2009.
PetroMed's Share in the Licenses is currently listed in PetroMed's name on the registry maintained by the Israel Ministry of National Infrastructures. Conditioned on the MNI's transfer approval, IPC, Emanuelle and IDB-DT will receive respective working interests on the Registry of 14.325%, 54.025% and 27.15% in the PetroMed's Share of the Licenses and the Permit.
Bontan's working interest in PetroMed's Share of the Licenses and Permit is 11% held through its holding of 76.8 % equity interest in IPC.
As part of their working interest acquisition, Emanuelle and IDB-DT agreed to contribute approximately US $ 16.1 million of which approximately US $ 10.5 million will be paid to WesternGeco, a geophysical services firm and a subsidiary of Schlumberger Limited, for joint title with IPC for the delivery of 2-dimensional data, and for processing an estimated 11 weeks of 3-dimensional geophysical mapping data on the License sites; these were shot and completed in November 2009. The MNI required the Data to be submitted by April 1, 2010 as a condition of the Licenses and will need to agree to an extension of the due dates under the Licenses for the submittal of the Data in order for the Licenses to be maintained. The balance of approximately US $5.6 million will be used for operational needs and for the benefit of PetroMed's creditor's through a Trust.
The terms of the agreement also include a commitment by all parties to seek reinstatement of the Benjamin permit and the conversion of the permit to one or more drilling licenses for the joint benefit of the parties.
PetroMed agreed to the cancellation of the 8.6 million shares of Bontan common stock, and the 22.8 million Bontan common stock warrants, issued to it as part of the consideration for the transfer of PetroMed's Share in the Licenses and Permit to IPC in November 2009. PetroMed will retain the $1 million cash payment made by IPC.
Kam Shah, CEO of Bontan, commented, "This is a very significant milestone for Bontan, partnering with strong local Israeli partners like Mr. Nimrodi and Mr. Sultan will allow this world class gas exploration project to advance to the next stage. This is particularly timely in light of the new March 2010 MNI regulations requiring applicants for offshore projects to demonstrate the financial capability to cover the full estimated cost of their initial project work program and half the estimated drilling cost per offshore well, as well as experience in operating large oil and gas exploration projects. We also believe that settlement of the PetroMed litigations will enhance our joint request to the MNI for official re-registration of PetroMed's Share in the Licenses in IPC's name and that of our other partners. After the 3-dimensional data is processed and analyzed, we expect to be in a position to begin the preparation leading up to the drilling of wells with an international operator. We look forward to a very successful partnership with our new investors."
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