Canada Energy signs 2 LOIs for oil production in Gabon

 

2022-03-21 07:30 ET - News Release

 

Mr. Grant Hall reports

 

CANADA ENERGY PARTNERS SIGNS TWO LETTERS OF INTENT FOR OIL EXPLORATION PRODUCTION IN GABON

 

Canada Energy Partners Inc. has negotiated and signed two separate letters of intent, one with a private oil company based in the United Kingdom and the second with a private, domestic oil producer based in Gabon, West Africa.

 

"These Letters of Intent are the first steps in pairing our technical expertise with local producers to acquire assets previously identified and owned by International Oil Companies in Gabon that have rationalized their portfolios," said Grant Hall, President of Canada Energy Partners. "It is our intent to build long and mutually beneficial relationships with oil industry professionals in Gabon that possess above average oil and gas assets."

 

The first Letter of Intent provides for the Company to acquire a 1.69% interest in a 166.7 KM 2 prospective licensed property. Within the licensed property there are 7 identified assets, of which 4 are onshore and 3 offshore in shallow water. The second Letter of Intent provides for the Company to acquire a 38.31% interest in the largest of the 7 identified assets. Ultimately, the Company will acquire a total of 40% interest in the largest onshore asset.

 

The Letter of Intent with the domestic oil producer based in Gabon requires the Company to make cash payments in the aggregate amount of $2,500,000 US. The Company will commit to a capital expenditure program of $7,000,000 US to begin as soon as approvals and due diligence reviews have been completed. The capital commitments will fund the drilling of two horizontal wells on the asset where a previously drilled well was successfully tested before being shut in.

 

The Letter of Intent with the UK company requires the Companhy to make a cash payment of $2,000,000 US and royalty payments to commence 6 months after commercial production begins of $4,000,000 over 4 years.

 

The favourable terms under the Profit-Sharing Agreement with the Government of Gabon covering the concessions under the Letters of Intent, combined with the current favorable oil prices is expected to allow the Company to recoup all of its advance payments and capital expenses on an expedited basis after commencement of production. The postivive cash flow from these concessions can then be used to organically grow the Company's oil assets without the requirement for any further diluting financings.

 

The Company's rights under the Letters of Intent are in a concession comprising of 166.7 km2 total gross area and included de-risked exploitation opportunities in 4 onshore and 3 offshore shallow water fields.

 

About Gabon:

 

Country of 267,700 km Superscript 2 in Central Africa.

Combination of offshore and onshore fields.

Legal terms: Production Sharing Contract (PSC).

Production:

 

Gabon is a mature oil province with First Oil in 1957.

It contains mature infrastructure for production and export, providing tie back opportunities for small/medium size field.

Peak oil at 220,000 bopd in 1997 with Rabi Giant.

Gabonese government is encouraging new development to halt production declines. Current Daily production: between 180 - 200 kbopd.

We seek Safe Harbor.