EnerGulf Resources (ENG-V) has agreed to buy Columbus Copper Corp. (CCU-V) for 9.2 million shares in a deal that values the latter company's stock at 6.9 cents. Investors do not seem enthusiastic. The companies are connected through Peter Gianulus, a director of EnerGulf and Columbus Gold Corp. Columbus Gold and Columbus Copper are part of Robert Giustra's Columbus group, which also includes Columbus Exploration Corp. Mr. Gianulus, either directly or through Carrelton Asset Management, of which he is president and managing director, holds shares of Columbus Gold, Columbus Exploration and EnerGulf. Once the takeover closes, Mr. Giustra will join EnerGulf's board and the company will effectively be part of the Columbus family. This will advance the family's efforts to get some oil and gas exposure. Earlier this month, Columbus Copper, which mainly looks for chromite in Albania, reached an agreement to acquire the block 8 hydrocarbon licence in Albania. This large block takes up the whole northern tip of the country. Most oil and gas activity is taking place in the south, dominated by the 20,000-barrel-a-day Patos-Marinza heavy oil field of Bankers Petroleum Ltd. (BNK-T). Near Bankers are the exploration-stage 2/3 blocks held by Shell and Frank Giustra's Petromanas Energy Inc. (PMI-V). (Robert Giustra of the Columbus group and Frank Giustra are cousins.) The first well on the 2/3 blocks made a discovery, but the second was suspended after running into operational problems. Columbus Copper did not go into this when it announced the deal earlier this month, and simply attached a map to its press release showing the locations of Bankers and Petromanas relative to block 8. For its part, EnerGulf declared in today's press release that block 8 includes "prospective areas with materially identical tectonic position to known oil and gas fields in southern Albania."
Assuming the takeover goes ahead (it is conditional on the block 8 acquisition closing), EnerGulf is doubtless hoping to reach production faster in Albania than in its current countries of focus, Namibia and the Congo. It has toiled there for about a decade without achieving revenue. Its two assets are a 15-per-cent interest in block 1711 offshore Namibia, where a well was drilled in 2008 but was non-commercial, and a 90-per-cent interest in the Lotshi block in the Congo, where a drill program originally planned for 2011 has been pushed back again and again. The current hope is 2015, although first EnerGulf will need the government's permission to extend its contract, which expired last November. |
