FIELD ACTIVITIES / Grande Portage Resources reports Details of Delvina
TORONTO, April 27 /CNW/ - Grande Portage Resources Ltd. (GPG - VSE) and
SH.A. Albpetrol being the parties to a Heads of Agreement announced on March
4, 1998, have settled the financial and corporate terms which will be
reflected in the Joint Operating Agreement (''JOA'') for the development of
the Delvina gas field in Albania. Both parties have agreed to release details
of the proposed JOA in order that Grande Portage is able to disclose these
details to potential investors. In anticipation of the parties executing the
JOA, the Government of Albania will issue a new operating license in the name
of the JOA. The Government of Albania has indicated its intention to have the
license issued and the JOA signed by June 1, 1998.
Amongst other terms and conditions, the JOA will state that:
1. The JOA will be assigned a 25 year license by the Albanian National
Petroleum Agency.
2. Operations at Delvina will be governed by a joint operating company
with equal ownership between the parties. The Board of Directors of
the joint operating company will consist of six members with each side
appointing three members. Decisions with respect to financial
expenditures during the experimental and development stage can only be
made by representatives of Grande Portage. Grande Portage will be
responsible for all experimental and development expenditures of the
project.
3. Grande Portage will receive 90% of project cash flow until such time
that its investment has been recovered and thereafter it will receive
50% of project cash flow.
4. The estimated total investment during the period of the 25 year
license is US$37 million. These expenditures most of which are
expected to be financed from project cash flow will be undertaken in
several phases. The initial phase of expenditures budgeted at US$3.25
million will be to rehabilitate both the Delvina wells No. 4 and No.
12. Subsequent budgets will be dependent upon the results of the
initial phase noted above.
5. No tax will be levied on goods and equipment or services imported for
operations. Note: The Albanian tax regime provides for a four year
tax holiday after which net profits are taxed at a rate of 30%.
6. Grande Portage will have the right to freely export its share of
production without restriction, however, Albpetrol will have the
option to purchase Grande Portage's production in U.S. dollars at open
market prices.
7. Grande Portage will have the right to repatriate its cost recoveries
and profits without restriction.
8. All facilities at Delvina including but not limited to electrical
services, gas pipeline and liquid storage capacity shall be made
available to the JOA.
9. The agreement between the parties will be governed in accordance with
the laws of the Republic of Albania. Any dispute which cannot be
resolved amicably will be submitted to a three member arbitration
panel in London, U.K. in accordance with the Rules of Arbitration of
the United Nations Commission on International Trade Law (UNCITRAL).
English law will be applied to any dispute submitted for arbitration.
In addition to announcing details governing operation for the Delvina
project, Grande Portage is also announcing that it has entered into a Letter
of Intent with the Government of Albania for the acquisition of the Fier
Fertilizer complex located approximately 100 km from the Delvina gas field. An
independent major U.S. based integrated oil and gas company has determined
that the natural gas required to operate the Fier plant (an estimated daily
consumption of 26 MMSCF) could be supplied by the Delvina gas field. The Fier
Fertilizer company has confirmed its intention to purchase natural gas from
Delvina at a rate of US$2.00 per MCF. Details of the Letter of Intent will be
released April 28th.
In order to meet its anticipated technical and financial obligations over
the coming months, management of Grande Portage has entered into discussions
with various international investor groups with the objective of securing a
minimum of US$4 million by way of private placement. This financing will be a
prerequisite to locating and retaining an experienced management team to
operate in Albania. Details of the proposed financing will be announced at the
conclusion of these discussions. Grande Portage's commitments under the
proposed JOA and its proposed financing will both be subject to regulatory
approval.
GRANDE PORTAGE RESOURCES LTD.
''A.T. Griffis''
Per:___________________________________
A.T. Griffis, President |
