Xtract Energy ups Extrem stake to 50%, JV partners to invest combined US$4m to explore Siraseki licence.
Xtract Energy (AIM: XTR) has entered into an agreement with its Turkish partners Merty Energy, acquiring a further 16% in their Extrem Energy joint venture for US$4.9 million. The company now has a 50% stake in the company. The JV partners also agreed to each contribute a further US$2 million into Extrem to fund ongoing work on the Siraseki licence, near the Syrian border.
?The notable increase of our shareholding in Extrem demonstrates the confidence of the board in the prospects for Extrem and for its significant licence portfolio in Turkey?, said Xtract chief executive Andy Morrison. ?The acquisition establishes joint control and represents another important step in the transformation of the company from a passive investor into one with more active involvement with its underlying assets".
Under the terms of the agreement Xtract will pay Merty US$4.9 million in staged payments for the additional equity in the joint venture company, whilst Merty will also re-invest some of the proceeds into the AIM listed resource company. Merty will invest US$0.9 million from the proceeds through the subscription for 30m new shares in Xtract.
Upon completion Extrem will be a 50:50 joint venture between the two companies. The US$4 million left after the share subscribtion will be used to fund the ongoing work programme at Siraseki, and drilling is planned during the second quarter of 2010. Extrem will drill an exploration well on the licence area, where seismic and GORE geochemical surveys previously discovered a new prospect called Menekselik. According to Xtract the Menekselik sandstone structure has an estimated area of 11.2 square kilometres and an expected pay thickness of 30m.
The company said it will provide an operational update shortly, including further details for the proposed Siraseki exploration well. Furthermore the company also intends to update investors on it exploration strategy for the other licences within the Extrem portfolio. Extrem Energy has a portfolio of licence interests including the high potential prospect at Candarli Bay in south-west Turkey, including the 80% interest in the Alasehir license which hosts the producing Sarikiz oilfield.
In January, Extrem spudded the Sarikiz-3 well, which has a proposed total depth of 1,950m, with the targeted Alasehir sandstones are expected to be encountered between 1,570m and 1,850m. The well has a preliminary pre-drill P50 estimate of 5.75 million barrels of recoverable oil based on a 2 square kilometre area, an assumed net productive pay thickness of 20 metres and a 20% recovery factor.
Xtract also owns 50.02% of Elko Energy Inc, a Canadian registered oil & gas exploration company which has interests in exploration and production licences in the Danish and Dutch North Sea. Its major asset is in the Danish North Sea: an 80 percent interest on 26 offshore blocks in a 5,400 square kilometres exploration and production licence close to the prolific Central Graben oil field. Elko also holds a 60 percent operating interest in gas-bearing license blocks P1 and P2 in the Dutch North Sea.
Zhibek Resources, 25% owned by Xtract, is an oil and gas exploration and production company with a 72 percent interest in the Tash Kumyr and Pishkoran exploration licences in the Kyrgyz Republic.
Xtract's wholly owned subsidiary Xtract Oil Ltd is focused on the development of the company's oil shale resources in Australia and the technology for oil extraction from oil shale resources. Xtract has oil shale exploration rights over mining tenement in the Julia Creek area of Queensland. In addition to evaluating third party technologies, XOL has been developing proprietary technology for the commercial extraction of liquid hydrocarbon products from oil shale.
Finally, Xtract Energy (Oil Shale) Morocco SA is a 70%:30% joint venture with Alraed Ltd Investment Holding Company WLL, a company controlled by Prince Bandar Bin Mohammed Bin Abdulrahman Al-Saud of Saudi Arabia. XOSM has signed a Memorandum of Understanding with the Moroccan oil and mining ministry regatrding the evaluation and possible development of an oil shale deposit near Tarfaya.