Eurogas International Inc

TUNISIA: 08/23/2019 10:54:52 PM
ALBERTA: 08/23/2019 3:54:52 PM

Farmouts

In April 2008 the Corporation’s predecessor and APEX entered into a series of agreements with Amsterdam-based Delta Hydrocarbons B.V. (Delta) whereby Delta acquired a 50 percent interest in the Sfax joint venture and a 50 percent interest in Innovative Production Services, Ltd. (IPS) in exchange for the expenditure by Delta of an aggregate of US$125 million, including a cash payment of US$24.5 million (US$11.2 net to Eurogas Corporation, predecessor to Eurogas International Inc). The commitment by Delta included carrying EII and APEX for their respective share of expenditures.

As a result of the Delta transaction, Eurogas International’s interest in both the Sfax joint venture and IPS was reduced from 45 percent to 22.5 percent. Under the terms of the agreements, if Delta does not fulfill its spending commitment, its 50 percent participating interest would be subject to reversal, in which case Eurogas International Inc’s interest in the Sfax joint venture and IPS would revert to 45 percent.

On January 27, 2009 Delta notified EII and APEX of its desire to market its 50 percent participating interest under the Delta farmout agreements. Pursuant to a right of first offer, EII and APEX responded with a settlement offer.

On May 22, 2009 Eurogas announced that, together with its Joint Venture partner, APEX, it has reached an agreement with Delta with respect to Delta’s previously expressed desire to exit from the Joint Venture and the related agreements pertaining to the farmout of the Sfax Exploration Permit and the Ras El Besh Concession in Tunisia. Prior to exiting the Joint Venture, Delta had expended approximately US$110 million on the project.

Under the Agreement, Delta will reassign its 50 percent participating interest in the Sfax Exploration Permit and the Ras El Besh Concession and transfer its shares in IPS to the remaining Joint Venture partners, including EII. In exchange, Delta will be entitled to a portion of certain payments, when received by the joint venture, including a share of the proceeds from the Cost Oil portion of any future production revenues and a share of the proceeds from any sale or lease of assets, to a maximum of US$20 million.

In 2012 the permit was farmed out to DNO with EII retaining a 5.625% carried working interest in the permit, DNO Tunisia drilled an unsuccessful well at Jawhara 3 in 2015. In 2018, Panoro Energy acquired DNO Tunisia.