I've just had a good read through the Union Gold/SPE agreement, and I don't think it directly affects CIVC, but I can see ways in which it could. What has to be remembered is that CIVC is the licence holder, and therefore has a very secure foothold whatever might happen around it. As I see it, the only way anyone else can get hold of that licence is for CIVC to surrender it voluntarily as part of a deal (as with Garden Hill), or for someone else to take over the company and therefore secure its assets. Forget the loan of $1million by Union Gold to SPE by the way. It's quite clear in the agreement that this is not development capital. The money is needed to pay off debts on the 2K39 well. Note that in the agreement, the Z is not added, which shows that this was drawn up before a sidetrack had to be drilled round the 'fish' , and well before the 'no commercial hydrocarbons' announcement.


Possible scenarios are:

1. The reverse takeover goes ahead. SPE raises money through equity funding for continued involvement as operator. The partnership continues as it is now, with CIVC as licence holder buying in to whatever level of interest it can afford. This could mean, as some have suggested, a reverse split, as it is doubtful whether CIVC could raise money in any other way.

2. Once it has gained public listing, SPE makes an offer to CIVC shareholders of 1 share for 10, 20, 30, 40 CIVC shares (whatever level they decide). If CIVC managment agree that this is a good plan, they advise shareholders to take up the offer and SPE gets CIVC plus the licenses. The CIVC management don't suffer, because their own holdings are converted into SPE holdings. They might even be elected to the board. This would the equivalent of a reverse split, but perhaps without the disadvantages. (The accountants amongst us would have to answer that
one.)

Either way, CIVC shareholders would still have their investment in West Coast oil prospects. We might even have the same team (Millan, Edwards, Mercer, Langdon) involved in the play. Enegi Oil, would retain its interest, of, I believe, around 30% for the immediate Shoal Point area and 60% for the rest of the licence area.

Factors affecting this, are:

how long it will take for the reverse takeover to be finalised;

whether the 75% of Union Gold shareholders who supported the merger will feel the same way now the three target formations have been pronounced dry; (Presumably what comes to light about the Green Point Shales could make a difference.)

Interesting times we live in. Of course this is all my speculation. Perhaps other posters can add to the list of possible scenarios.

Regards
Dunnock

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