East West Petroleum Corp. announced that the Company has entered into an agreement to acquire a 20% working interest in a producing oil field (approximately 500bo/d) in Egypt (the “Acquisition”) from a private vendor.
The field is situated in Egypt where oil and gas discoveries continue to be made by numerous international operators, including ENI, Apache, Shell and IPR International. With continued production, the field development lease can be extended through to 2021. East West Petroleum has identified conventional oil-bearing reservoirs where the application of unconventional drilling and completion technologies may contribute to increasing the productivity of the producing reservoirs and the overall value of this asset.
Greg Renwick, President and CEO commented: “This acquisition marks East West Petroleum’s entry into Egypt and is an important milestone in the Company’s business plan to expand overseas, build a platform of near-term production, and capture assets whose value can be enhanced through the application of modern unconventional drilling and completion technologies.”
Near-term investments will be directed towards appraising the lateral extent of multiple productive zones, development drilling and recompletions to increase oil production.
In order to complete the Acquisition, the Company must pay the vendor US$17.5 million, of which US$3.5 million is being paid as a deposit. The Company has organized bridge loans to pay the deposit, for which it will be issuing bonus shares subject to regulatory approval.
The Acquisition will be effective from December 1, 2010. Closing is subject to various conditions including the approval of the TSX Venture Exchange, the completion of a financing, and third party consents, including Egyptian regulatory approval and endorsement.