EnerGulf to acquire Gulf of Mexico prospects interests
2016-06-09 09:23 ET - News Release
Mr. Ernest Miller reports
ENERGULF ANNOUNCES PARTICIPATION IN GULF OF MEXICO PROJECTS
EnerGulf Resources Inc. has signed a letter of intent to acquire certain interests in offshore Gulf of Mexico oil and gas prospects, and is providing a company update.
Gulf of Mexico -- acquisition of rights
EnerGulf entered into a letter of intent with Texas South Energy Inc. to participate in six offshore Gulf of Mexico prospects owned and operated by GulfSlope Energy Inc. Subject to the execution of definitive agreements and the company's financial obligations therein, the LOI provides for participation by the company in drilling one well on block 378, Vermilion area, south addition (Canoe prospect), and a second well on either the Canoe prospect or block 375, Vermilion area, south addition (Selectron Shallow prospect). The company has made a $200,000 (U.S.) payment for its interest in the Canoe prospect. On June 27, 2016, the company will pay an additional $200,000 (U.S.) for its interest in the Selectron Shallow prospect. Upon payment, the company will own a 43.75-per-cent non-operated working interest, and will have certain cost interest obligations in the Canoe and Selectron Shallow prospects.
The LOI also provides for the payment of $400,000 (U.S.) on June 27, 2016, for the acquisition of an undivided 25-per-cent non-operated working interest in the following subsalt prospects: block 870, Ewing bank, and block 914, Ewing bank (Alpha prospect); block 904, Ewing bank, and block 948, Ewing bank (Beta prospect); block 348, Ship Shoal, south addition (Baryon prospect); and Block 371, Eugene Island, south addition (Proton prospect). All blocks are operated by GulfSlope.
As additional consideration, EnerGulf has agreed as a term of the definitive agreement to issue to Texas South a warrant to purchase up to seven million common shares of EnerGulf exercisable for a three-year term at a price of six cents per share.
If EnerGulf fails to meet any payment obligation under the LOI, it will lose the right to participate in the prospect to which such non-payment applies. Furthermore, its participation right in any financed prospects will be reduced proportionately based on the actual payments made relative to the total payment obligations under the LOI.
Albania -- block 8
EnerGulf has been issued a production sharing agreement (PSA) for block 8 in the Republic of Albania. The company will evaluate the optimal development strategy for the block. Block 8 is one of the largest oil and gas blocks in the Republic of Albania, a member of North Atlantic Treaty Organization and an official candidate for membership in the European Union. The company also acquired various chromite properties in Albania and is currently evaluating its strategic options.
Namibia -- block 1711
EnerGulf is awaiting the 3-D program required of the operator and remains committed to the very prospective block.
Lotshi block (Democratic Republic of Congo)
EnerGulf intends to seek a further extension of the Lotshi block production sharing contract with the government of the DRC. The company remains committed to the DRC and the block's potential in the face of current industry difficulties.
Addition of advisers
In connection with the Gulf of Mexico acquisition, EnerGulf has named John B. Connally III and James M. Askew as advisers to the company.
Mr. Connally, an independent energy investor based in Houston, Tex., is a former partner of the law firm Baker Botts in Houston, Tex., specializing in corporate finance transactions in the oil and gas sector. Mr. Connally has participated in founding various oil and gas ventures. He served as a founding director of Nuevo Energy, and was a founding director and former chief executive officer of both Pure Energy Group Inc. and Pure Gas Partners. Mr. Connally currently serves as chairman of the Lt. Governor's Energy Advisory Board in Texas.
Mr. Askew is an independent oil and gas investor based in Houston, Tex. He is a co-founder and formerly served as EnerGulf's president and as a director. He is also a founder, chairman of the board, president and CEO of Texas South, and is a founder, former president and former director of GulfSlope. Mr. Askew has been active as an investor and entrepreneur in oil and gas projects for over 20 years.
Debt settlement with Columbus Gold Corp.
The company has entered into a debt settlement agreement dated June 1, 2016, for the settlement of existing debt in the amount of $50,925 owed to Columbus Gold, a company that provided head office and management services to EnerGulf until May 31, 2016. Under the settlement agreement, half of the debt was forgiven and cancelled, and, subject to acceptance by the TSX Venture Exchange, the remaining half will be exchanged for common shares of the company at a price of five cents per share, for an aggregate issuance of 509,250 common shares to Columbus. The shares will be subject to a four-month hold period.
We seek Safe Harbor.