AGREEMENT / Tracer Petroleum Announces Middle East Agreement
VANCOUVER, Dec. 11 /PRNewswire/ -- Tracer Petroleum Corporation (Nasdaq: TCXXF) (Vancouver: TPC) reports that efforts to seek geographic diversity in their international portfolio of projects have been advanced by the formalization of a consortium to pursue the acquisition of oil and gas interests in the Islamic Republic of Iran.
As part of the governing agreement, a new subsidiary company is to be established as a joint venture between Tracer and a group possessing long term working relationships with relevant authorities in Iran as a prerequisite to the joint venture obtaining entry to a select number of projects in that country. Mr. William T. Mullins of London, England will be appointed as the President and a Director of the new subsidiary. Mr. Mullins has previously held senior positions with Citibank, London, and Credit Suisse First Boston, with responsibility for projects in the Middle East, and he was formerly Executive Director of London Stock Exchange-listed Dragon Oil plc from 1992 to 1996. Mr. Mullins will be spearheading the pursuit of the project
interests in Iran.
This release contains ''forward-looking statements'' as per Section 21E of the US Securities and Exchange Act of 1934, as amended. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Management is currently reviewing many options and there is no assurance that final decisions made will be as indicated. The Company is subject to political risks and operational risks identified in documents filed with the Securities and Exchange Commission, including changing and depressed oil prices, unsuccessful drilling results, change of government and political unrest in its main area of operations.
PRIOR RELEASES
Tracer Executes Agreement for Producing Block in Indonesia
VANCOUVER, British Columbia, Dec. 9 /PRNewswire/ -- TRACER PETROLEUM CORPORATION (Nasdaq: TCXXF; Vancouver: TPC) announces that it has executed an agreement to acquire a minimum 80% interest in the Sungai
Gelam A, B, & D Technical Assistance Contract (''TAC'') located in South Sumatra in the Republic of Indonesia
The TAC covers an established but still underdeveloped field divided into three fault blocks on two structures which have produced some 230,000 barrels from the Air Benekat Formation since initial drilling in 1958. There are a total of six wells on the contact area with one well currently producing an estimated 44 barrels of light, low paraffinic oil per day. No modern technology has been applied to the field and no significant activity has been undertaken by Pertamina since the late 197Os or the vendors who were granted the 20-year TAC by Pertamina in May 1997. The field is adjacent to the Kenali Asam Field which has produced over 90 million barrels to date from the Air Benekat.
Proven recoverable reserves are estimated at 400,000 barrels with probable and possible reserves of up to 40 million barrels recoverable. The deeper, highly prolific Talang Akar Formation (the major producing sandstone in the Company's Ogan Komering block) has not been fully evaluated, but tested hydrocarbons in the one well which penetrated this zone. Also, one major fault block between the adjacent productive blocks and high to these blocks has not been drilled to date.
Terms of the acquisition include:
1. A deferred note in the amount of US $1,000,000 payable without interest in two years.
2. An agreement to pay the vendor an additional amount equal to $1.00 per barrel of proved reserves in excess of 2 million barrels as established by independent consulting engineers, which study will be undertaken in two years. A note for this amount will be executed by Tracer at the conclusion of the study and be payable over an additional two years in equal installments to include interest at LIBOR.
3. A commitment to complete a minimum work program equal to US $2.0 million over a 24 month period commencing after the transfer has been approved by all necessary authorities.
4. A finder's fee of 125,000 shares of the Company is payable upon final approval of the transfer of operatorship by Pertamina and appropriate regulatory authorities.
The agreement is subject to various conditions which must be satisfied prior to the expenditure of any funds by Tracer. The Company has completed a preliminary due diligence, and a preliminary Work Program has been prepared. Detailed due diligence will commence early in January 1999 with critical liability understandings to be verified by the vendor's financial institution by January 15, 1999.
There is no cash to be paid up front for the acquisition as all parties appreciate the importance of having work completed on the
block to prove value and achieve efficient production at an early date.
Tracer Announces Third Quarter Results and Update on Corporate Activities
(all funds in Cdn. $ unless otherwise stated)
VANCOUVER, British Columbia, Nov. 30 /PRNewswire/ -- TRACER PETROLEUM CORPORATION (Nasdaq: TCXXF; TCXWF;) announces the results of operations for the period ending September 30, 1998. Net loss for
the nine months ended September 30 was $9,624,951 or $2.59 per share (1997-net profit of $224,841 or $0.06 per share). This loss is primarily due to a write-down of $6,649,665 after a depletion allowance totaling $2,586,359 (1997-$300,000) for the North Tanjung Block (''NTB'') in Indonesia. The write down results from a ceiling test determination recognizing limitations on financing further exploration. Before write-down and depletion and amortization the Company would have reported a net profit of $51,673 or $0.00 per share.
Revenue from oil and gas operations decreased to $1,531,418 (1997 - $2,542,622) reflecting significantly lower oil prices realized during the period compared to 1997, and a difference of $180,574 which represented the revenue in 1997 from Canadian properties which were sold.
Gross production from the Company's 4.25% interest in the Ogan Komering Block (''OK Block'') continues at over 16,000 barrels per day; however, revenue per barrel has fallen below US $12.00 resulting in lower amounts attributed to our interest.
A copy of the full quarterly report is available from the Company or may be viewed on Tracer's web site.
Operationally, between July 25 and August 25 of this year, the Company drilled and tested an appraisal well, Ngurit #2, on the Ngurit gas discovery in the NTB. Although structural closure and reservoir extent were confirmed, the target sands which logged as gas bearing were of insufficient quality to warrant the completion of the well. Proposals to utilize the existing gas discovered in Ngurit are being negatively impacted by conditions related to US dollar economics and power market factors. In the meantime, potential partners are being actively canvassed to determine support for drilling a third well on the Ngurit structure to test a possible associated oil column.
In mid-November the Company received notification from NASDAQ that the bid price for its common shares has failed to meet the minimum continued listing requirement of US $1.00 for over 30 days. As a result, Tracer has been granted until Feb. 11, 1999 to achieve this minimum bid price for 10 consecutive days failing which our shares will be subject to delisting from the NASDAQ Small Cap Market. Although management views this situation seriously, the Company believe alternatives currently being considered will be viewed positively by investors and the minimum price requirements will be satisfied well within the granted grace period.
The Company's warrants that were trading under the symbol ''TCXWF'' on the NASDAQ Small Cap Market were delisted in November due to the lack of sufficient market makers. The Company is taking steps to have the warrants accepted for trading on the OTC ''Bulletin Board''.
Management is strongly of the opinion that the Company must move forward with the acquisition of a revenue producing property. Our discussions in Indonesia have centered on negotiations with a major bank as disclosed in previous news releases. These negotiations have been intensive, if somewhat sporadic due to political developments in the country and demands on the bank from central bank authorities and IMF inspectors. Management has emphasized to the bank negotiators that closure on the first project is required without further delay. Bank officials are currently meeting with Tracer's CFO and President in an attempt to bring the negotiations to a final conclusion.
The Company is aware of the increased business risks, both real and perceived, in Indonesia. Tracer believes it must diversify into other areas of the world in order to reduce risks associated with a single geographic focus. Accordingly, during the third quarter, the Company undertook the review of a number of potential projects located in North America and most recently the Middle East. The Board has given conditional approval to advance with a project structure that is anticipated to give Tracer a selection of significant development opportunities in the Middle East. The Company will provide additional information as documentation proceeds.
Following discussions with the BC Securities Commission, the Company has changed its method of accounting to Generally Accepted Accounted Principles (''GAAP'') in Canada from the previous practice of utilizing US GAAP in all financial reports. The effect of this change is noted in the quarterly financial statements. In addition, the Company has prepared revised Audited Consolidated Financial Statements for the year ended December 31, 1997 in accordance with Canadian GAAP which statements together with the Auditor's Report thereon may be viewed on our web site or received from our Vancouver office. |
