Global Energy announce Farm-out Agreement signed for Bolivar 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 Bolivar association contract area (the “Contract Area”), in the Middle Magdalena Basin, with Everest.
The Agreement marks the successful conclusion of a previously announced extensive marketing process conducted by Jefferies International over the last 12 months in connection with the Bolivar association contract.
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 $5 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 and hydraulically fracture potential formations in two existing wells within the Contract Area; and
(2) within two years of completion, to drill and complete one new exploitation 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 21,849,016 Global shares, representing approximately 60.50 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 very keen to re-commence its activities in the Middle Magdalena Basin. This agreement not only provides us with the funding for a three well progamme but it also allows us to share the risks as we jointly develop the Company’s largest asset base.”