Global Energy announce Farm-out Agreement signed for Bocachico Association Contract Area
Global Energy Development PLC, the Latin America focused petroleum exploration, development and production company (AIM: GED) with operations in Colombia, is pleased to announce that it has signed a farm-out agreement (the “Agreement”) with respect to its Bocachico Association Contract area (the “Contract Area”), in the Middle Magdalena Basin, with Everest.
Under the terms of the Agreement, Everest will acquire a 50 per cent. interest in the Contract Area, including any and all rights, obligations and duties in respect of the Contract Area in exchange for payment of the work commitments stipulated in the Agreement and the cash payment of $1 million. The Agreement is subject to certain conditions, including Ecopetrol approval. Under the Agreement, Everest commits to undertake the funding of a work program with respect to the Contract Area (the “Work Program”), including an obligation to pay all future costs and expenses incurred with respect to the proposed operations:
(1) within one year of completion of the Agreement, to re-enter two existing wells within the Contract Area; and
(2) within two years of completion of the Agreement, to drill and complete one new development well in the Contract Area.
The Work Program shall be governed by a joint-venture agreement to be agreed between Global and Everest. Everest is an affiliated company of the Quasha family trusts which also have an interest in Lyford Investments, Inc., an existing shareholder in Global. HKN, Inc. (“HKN”), Global’s principal shareholder, Lyford Investments, Inc and parties acting in concert with it are interested in 22,362,016 Global shares, representing approximately 61.92 per cent. of the issued share capital of the Company. By virtue of these holdings, entry into the Agreement constitutes a related party transaction under the AIM Rules. With the exception of Mr. Mikel Faulkner, who is a director of HKN, the Company’s Directors consider, having consulted with Northland Capital Partners Limited, the Company’s Nominated Adviser, that the terms of the Agreement are fair and reasonable insofar as the Company’s shareholders are concerned.
Stephen C. Voss, Managing Director of Global, commented
“The Company is looking forward to accelerating oil production from our Bocachico Contract area, with its significant 2P oil reserves.”
Source: GLOBAL ENERGY DEVELOPMENT PLC