ShaMaran Acquires Stake in Iraqi Block
ShaMaran has entered into a Subscription Agreement and a Shareholders Agreement with Aspect, whereby ShaMaran Ventures BV, a wholly owned subsidiary of the Company has acquired a one third stake in General Exploration Partners, a wholly owned subsidiary of Aspect.
The Kurdistan Regional Government of Iraq ("KRG") and GEP are parties to a Production Sharing Contract dated November 10, 2007 (the "PSC") in respect of the Atrush Block Oil and Gas Exploration Area located in the Kurdistan Region of Iraq (the "Atrush Block"). GEP currently owns 80% of the rights and obligations of the Contractor in the PSC and the Contract Area and the KRG owns the remaining 20%.
The Atrush Block is located immediately north and adjacent to the major new Shaikan discovery announced by Gulf Keystone Petroleum Ltd. in January 2010. The 2D seismic data over the Atrush Block indicates that the Atrush structure is similar to the Shaikan structure. The Shaikan discovery was announced as multiple stacked oil reservoirs in the Cretaceous, Jurassic and Triassic sections, with reported estimated potential resources between 1.9 billion barrels (P90) and 7.4 billion barrels (P10), with a mean of 4.2 billion barrels of oil. The Atrush Block is also adjacent to and on trend with the recent Bijeel oil discovery to the east, operated by Kalegran Limited (MOL).
The Atrush 1 exploration well location has been approved and the well is expected to spud in September 2010. The well (planned depth of 3100 meters) is prognosed to encounter the same reservoir sections as Shaikan and will also test the structural extension of the Shaikan discovery into the Atrush block as indicated from the 2D seismic data. Of the ten expected target reservoirs in Atrush 1, nine were confirmed to be oil-bearing in Shaikan, while the Lower Kurra Chine encountered high pressure gas. There is also additional upside potential in the shallower Cretaceous Qamchuga formation, and the deeper Permian section (not reached in Shaikan), which is also indicated by seismic data to have closure in Atrush.
Under the terms of the agreement, ShaMaran BV has acquired 33.5% of the fully-diluted share capital of GEP in exchange for initial cash payments totaling $24.1 million, 12.5 million shares of ShaMaran, and a future obligation to contribute the next $15.9 million in cash which will be required to fund GEP's operations (the Company has over USD $50 million in cash as of date to fund these commitments). Thereafter, each of the shareholders of GEP will fund operations pro-rata according to their participating interest (including its share of the KRG carried interest). All of the above mentioned payments, with the exception of the share consideration, will be added to a designated cost pool within GEP, to be repaid to ShaMaran BV out of future oil production which is attributable to petroleum cost recovery under the terms of the PSC.
Pradeep Kabra, President and CEO of ShaMaran, commented, "We are very excited about our partnership with Aspect and the opportunity to participate in one of the most exciting exploration blocks in the Kurdistan Region of Iraq."