Supplementary Information To The PA Resources Acquisition Of Tunisian Assets

abarrelfullabarrelfull wrote on 26 Aug 2014 09:16

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On 19 November 2004 PA Resources AB (PAR) announced that it has entered into a Sale and Purchase Agreement for the acquisition of SOCO International plc 22.22% interest in the Zarat Permit offshore Tunisia in the Gulf of Gabes. The Permit includes the producing field Didon and a number of oil and gas discoveries within the concession. The permit area is operated by the French company M. P. Zarat (77.78%).The acquisition will triple the Company’s oil production and substantially increase the Company’s reserve base. Further possibilities arise in the development of the discoveries made under the Zarat permit.

The acquired interests are held by SOCO Tunisia Pty Limited, which is in turn wholly owned by SOCO Overseas Limited. All the shares of SOCO Overseas Limited are acquired in the transaction. The transaction was subject to certain customary due diligence conditions which are lifted. Currently, the only condition remaining is the closing of the lending facility with the Company’s bank.

The acquisition is effective as of 1 July 2004 for accounting purposes. PA will acquire SOCO Overseas Limited for approximately USD 25 million, paid in cash. The closing of the transaction is expected completed during December 2004. The acquisition will be financed with debt and existing cash.

The acquisition is consistent with the Company's strategy to acquire producing fields with an exploration and development upside. The fields will be administrated from the Company’s existing organisation in Tunisia.

A prospectus regarding the acquisition of SOCO Overseas Limited with pro forma financial information, in compliance with the Stock Exchange Regulations, will be published as soon as possible.

The producing Didon field is located within the Didon exploration concession, which is part of the 724 square kilometre Zarat exploration area described below. The field is located offshore 75 kilometres to the east of the Tunisian Libya border at water depth of approximately 75 meters. Four wells have been drilled to date. The 40 m thick reservoir has been producing since 1998 from a single subsea well tied back to the Didon FPSO. In September 2004 an additional subsea well was set in production.

The Didon field produced in 8,900 BOPD in October 2004, equal to 1,985 BOPD for the acquired working interest. In 2005, plans are to install a platform on the field and to drill an additional well to increase production. Preliminary production forecast is that the new platform and well will increase production to at about 15,000 BOPD, equal to 3,300 BOPD for the acquired working interest.

Proved and probable reserves in the Didon field on an entitlement basis were 28.3 million BO at the end of 2003, equal to 6.3 million BO for the acquired working interest.

The Zarat permit area of a total of 724 square kilometres comprises a number of oil and gas discoveries and prospects among the Elyssa, Zarat and the El Nisr field discoveries. Each of these discoveries holds recoverable oil and gas reserves.

In 2004 a 3D seismic acquisition of 700 square kilometres was made in order to determine further development of these discoveries. The recorded data will be processed and interpreted under the remaining of 2004 and in 2005. Based on these results of the seismic interpretation a new exploration well will be drilled late in 2005.

In Tunisia, each concession is regulated by a license convention between the authorities and the licensees. In the Zarat permit, the Tunisian state can, according to the license convention, enter fields declared as commercial and with an approved field development plan, with up to a 55% interest, within 6 months after start of production. This interest, if exercised, will be made through the Tunisian State Oil Company, ETAP. In the Didon field, the state did not exercise this right. In the Zarat and Elyssa fields, and in other exploration fields under the Zarat permit, the state can exercise this right after reimbursement of all accrued cost. The acquired interest in these exploration fields can, on a field to field basis, be diluted to a minimum of approx. 10%.

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