Oil Optimisation Inc. (TSX VENTURE:OOI) (“OOI” or the “Company”) is pleased to announce that it has entered into a farm-in agreement (the “Agreement”) with Rockstone Petroleum Limited (“Rockstone”) relating to its 100 percent owned Block L14-50 in the north Phetchabun basin (the “Block”). Rockstone is part of a group of privately-owned companies investing in oil and gas exploration and mining assets. Under the terms of the Agreement, Rockstone will have the right to acquire up to a 60 percent working interest (subject to increase in certain circumstances in accordance with the provisions of the Agreement) in the Block by making certain cash payments and funding certain work programmes in respect of the Block. OOI’s wholly-owned subsidiary, JSX Energy Holdings Limited (“JSX BVI”), through its local branch office in Thailand, will be the initial operator in respect of the Block.
On signing the Agreement, Rockstone will commit to fund a 50 line kilometre 2D seismic programme to a maximum cost of $750,000 (plus any applicable VAT), in exchange for earning a 20 percent working interest in the Block. Under the Agreement, OOI will cover the cost of the seismic programme in excess of $750,000 or be subject to certain penalties in accordance with the provisions of the Agreement. In addition, Rockstone has committed to make an additional payment of $50,000 to OOI not later than 60 days following the effective date of the Agreement in exchange for an additional 2 percent working interest in the Block.
On completion of the seismic programme, Rockstone will have the option to acquire an additional 35 percent working interest in the Block in exchange for committing to fund the drilling of a well to a maximum cost of $1,500,000 (inclusive of all applicable VAT). Under the Agreement, OOI will cover the cost of the well in excess of $1,500,000 or be subject to certain penalties in accordance with the provisions of the Agreement. Rockstone will have the option, exercisable at its sole discretion, to satisfy any overrun costs not satisfied by OOI (whether in respect of the seismic programme or the well) in exchange for earning an additional working interest in the Block at a discounted rate.
Concurrently with the delivery of its written election to fund the well programme, or, in the event Rockstone elects not to fund such well programme, within 10 days of the earlier of (1) delivery of its election not to fund such well programme or (2) the expiry of the election period, Rockstone shall make an additional payment of $100,000 to OOI in exchange for an additional 3 percent working interest in the Block.
Following receipt of Rockstone’s election with respect to funding the well programme (or election or deemed election to not fund such programme), JSX BVI will make application to the Thai government to assign registered title to the applicable working interest to which Rockstone may be entitled under the Agreement. In the event that transfer of registered title to Rockstone of the applicable working interest to which Rockstone is entitled under the Agreement is not completed within 24 months following submission to the Thai regulatory authorities of the requisite application in respect of such transfer, Rockstone shall be entitled to acquire an additional 10 percent working interest in the Block for no additional consideration.
Certain of the parties’ obligations under the Agreement are subject to a security interest enforceable in accordance with the terms of the Agreement.
On completion of the well programme (or if the well programme option is not exercised), the parties will enter into a joint operating agreement whereby they will agree to share the costs of any further work programmes based on their pro rata share in the Block.
This news release may contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. 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 or statements. More particularly and without limitation, this news release contains forward- looking statements and information concerning the expected activities of Oil Optimisation. The forward-looking statements and information are based on certain key expectations and assumptions made by Oil Optimisation. Although Oil Optimisation believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Oil Optimisation can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward-looking information for anything other than its intended purpose. Oil Optimisation undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Oil Optimisation Inc.
Chief Financial Officer