CALGARY, June 24, 2013 /CNW/ - Petromanas Energy Inc. ("Petromanas", or the "Company") (TSXV: PMI) today announced that it has entered into an amended definitive farm out agreement (the "Agreement") with a wholly owned subsidiary of Royal Dutch Shell plc ("Shell"), whereby Shell will further farm into the Company's exploration rights on Blocks 2-3 (the "Blocks") comprising approximately 852,000 gross acres onshore Albania. Under the terms of the Agreement, Shell will acquire a further 25% participating interest in the Blocks in exchange for total consideration of approximately US $22 million. Assuming full execution of the exploration program, the Company expects the Agreement will result in a reduction of its net cash outflows by more than US $60 million over the next two years. Petromanas remains the operator of the Blocks and the Joint Operating Agreement between the parties remains in force and unchanged. The Agreement is effective June 1, 2013 and is subject to customary closing conditions including the receipt of all necessary regulatory and government approvals.
"Our understanding of the prospects on Blocks 2-3 continues to evolve through a combination of our own experience drilling the Shpirag-2 well and our partner's insight generated through recent and ongoing work in analog plays in the region," said Mr. Glenn McNamara, CEO of Petromanas. "The joint venture has determined that the defined exploration program will include three wells and a seismic program with gross spending projected to approach US $200 million. Reducing the Company's working interest to 25% allows the Company to mitigate risk and improve financial flexibility. With a focus on planning for long term success, management believes this decision will allow Petromanas to participate in the ongoing exploration of Blocks 2-3 with a sustainable working interest. We view Shell's willingness to acquire an additional interest in this asset as an indication of their belief in the prospectivity of Blocks 2-3 in Albania."
Under the terms of the Agreement, Shell will make equalization payments with respect to gross drilling costs on the Shpirag-2 well to a maximum of US $50 million. Shell will increase the carry on the Molisht-1 well to a maximum of US $50 million gross drilling costs and will carry Petromanas on a third well to a maximum value of US $42.5 million gross drilling costs. The Agreement also reduces the Company's share of the US $40 million 2013 seismic program to approximately US $1 million. Any potential excess costs of the expanded work program over the carried amounts shall be jointly paid by both parties in proportion to their participating interest.
Petromanas today also announced the Sphirag-2 well has reached total depth (TD) of approximately 5,500m. The total drilling gross cost is now projected at approximately US $70 million (net US $16 million assuming closing of the Agreement). The rig will be moved off the Shpirag-2 lease once the Molisht-1 lease construction is completed. Stimulation and testing equipment rig up will commence once the drilling rig is off the Shpirag-2 lease. The Company intends to test in the range of 350-400 metres of the target carbonate. Timing for the rig move and commencment of testing operations is expected to be mid-August 2013.
Conference Call Details
The Company will host a conference call and webcast on Tuesday, June 25, 2013 at 7:00 a.m. MT (9:00 a.m. ET) to discuss in more depth its activities in Albania. To access the conference call by telephone, dial 1-647-427-7450 or 1-888-231-8191. A live audio webcast will also be available at the following link: http://www.newswire.ca/en/webcast/detail/1187807/1302053. Please connect at least 10 minutes prior to the webcast to ensure adequate time for any software download that may be needed. A replay of the webcast will be available at www.petromanas.com and will also be available by telephone through July 2, 2013. To access the telephone replay, dial 1-416-849-0833 or 1-855-859-2056 and enter reservation number 99870296 followed by the number sign.
About Petromanas Energy Inc.
Petromanas Energy Inc. is an international oil and gas company focused on the exploration and development of its assets in Albania. Petromanas, through its wholly-owned subsidiary, holds two Production Sharing Contracts ("PSCs") with the Albanian government. Under the terms of the PSCs, Petromanas has a 100% working interest in Blocks D and E and a 25% working interest in Blocks 2-3 (assuming closing of the Agreement) that comprise more than 1.1 million gross acres across Albania's Berati thrust belt. Petromanas also holds exploration assets in France and Australia.
This press release contains forward-looking information within the meaning of applicable securities laws and are based on the expectations, estimates and projections of management of Petromanas as of the date of this news release unless otherwise stated. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information. More particularly and without limitation, this press release contains forward-looking information concerning the future performance of the Company, including but not limited to the completion and testing of the Shpirag-2 well, the spudding of the Molisht-1 well and the completion of the transactions contemplated by the Agreement. In respect of the forward-looking information concerning the future performance of the Company, Petromanas has provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the timing and drilling of wells and the Company's ability to meet its operational commitments, the ability of Petromanas to receive, in a timely manner, the necessary regulatory and governmental operational approvals; and expectations and assumptions concerning, among other things: commodity prices and interest and foreign exchange rates; planned construction activities, capital efficiencies and cost-savings; applicable tax laws; the sufficiency of budgeted capital expenditures in carrying out planned activities; and the availability and cost of labour and services. Accordingly, readers should not place undue reliance on the forward-looking information contained in this press release.
Since forward-looking information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to the risks associated with the industries in which Petromanas operates in general such as operational and exploration risks; delays or changes in plans with respect to growth projects or capital expenditures; delays in obtaining governmental approvals, permits or financing or political risks in the completion of development or construction activities; access to drilling rigs, completion equipment, seismic equipment and operational personnel; costs and expenses; political risks; title disputes; health, safety and environmental risks; commodity price, interest rate and exchange rate fluctuations; environmental risks; competition; ability to access sufficient capital from internal and external sources; and changes in legislation, including but not limited to tax laws and environmental regulations. There is a specific risk that the Company may be unable to complete the completion and testing of the Shpirag-2 well at costs estimated and in the manner described in this press release or at all. There is also a specific risk that the transaction contemplated by the Agreement may not be completed as described in this press release or at all if the closing conditions including the receipt of all necessary regulatory and government approvals are not met. If the Company is unable to complete and test the Shpirag-2 well at costs estimated and in the manner described in this press release or at all and/or the closing conditions in the Agreement are not met, there could be a material adverse impact on the Company and on the value of the Company's securities.
Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on other factors that could affect the operations or financial results of Petromanas are included in reports on file with applicable securities regulatory authorities, including but not limited to; Petromanas' Annual Information Form for the year ended December 31, 2011 which may be accessed on Petromanas' SEDAR profile at www.sedar.com.
The forward-looking information contained in this press release is made as of the date hereof and Petromanas undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: Petromanas Energy Inc.
For further information:
Glenn McNamara, CEO
Bill Cummins, CFO
Petromanas Energy Inc.
Suite 1720, 734 - 7th Avenue SW
Canada T2P 3P8
Tel: +1 403 457 4400
Fax: +1 403 457 4480
Email: [email protected]
The Equicom Group
300 - 5th Avenue SW, 10th Floor
Canada T2P 3C4
Tel: +1 403 218 2835
Fax: +1 403 218 2830
Email: [email protected]