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Gold/Mining/Energy : American International Petroleum Corp -- Ignore unavailable to you. Want to Upgrade?

To: qdog who wrote (7531)	2/24/1998 12:59:00 PM
From: Terry Jackson	Read Replies (2) \| Respond to of 11888

Here it is --- Subj: Kazak Production Agreement? By: t75rsj1 Date: Feb 23 1998 9:18 A.M PST Reply To: Msg. 1850 by Neftegas Neftegas - Isn't this the official production agreement with the Kazak government that was signed in 11/97?? Monday November 24, 8:17 am Eastern Time Company Press Release American International Petroleum's Joint Venture Company Signs Operating Agreement with Kazakstan Government Subscription and Commercial Field Bonuses As Well As Taxes Are Fixed NEW YORK--(BUSINESS WIRE)--Nov. 24, 1997-- American International Petroleum Corp. (NASDAQ:AIPN - news), today announced that Med Shipping Usturt Petroleum, LLC (''MSUP''), of which the Company owns a 70% equity interest, has signed the ''Contract on Exploration of Hydrocarbons'' (the ''Contract'') with the State Committee of the Republic of Kazakstan on Investments. The Contract is the definitive operating document, or Operating Agreement, under which MSUP, as Operator of Exploration License No. 953, will manage the exploration and evaluation of hydrocarbon reserves within the 4.7 million acre License Area. A major point of negotiation was successfully resolved with the government when the commercial bonus for newly discovered fields was set in the Contract at only .05% of the reserve value and the subscription bonus was set at $975,000. The Contract gives MSUP the exclusive right to receive a production license upon the occurrence of a commercial discovery. MSUP also retains the right to commercialize the data acquired during the exploration for a period of 10 years after the completion of exploration. In addition, the Contract provides that the 5-year exploration period defined in the License may be extended by an additional 4 years to allow for expanded work programs. Initial test production of up to 650,000 barrels will be exempt from royalty. However, the royalty rate for production above this level, which normally ranges between 6% and 26%, depending on the production levels, will be negotiated and defined later in the production agreement with the government. Income tax was fixed at 30%. Investments in social programs in the License Area have been fixed at only $100,000 per year during the exploration period. The Company said that the Contract requires an aggregate minimum expenditure of $14.75 million over the initial five year exploration period, of which only $6.3 million is required during the first three years. ''This is a critical step on the road to the successful development of our project,'' Company CEO George Faris said. ''We are particularly pleased that we were able to establish favorable subscription and commercial field bonuses with the government. While there is little doubt as to the potential of significant oil reserves in the license area, the new contract establishes clear guidelines for economic evaluation of such potential reserves and thus makes it easier for us to attract potential partners.'' The Company said earlier that development of the License database in both Denver and Almaty has begun and the initial seismic lines are being reprocessed for orientation of the seismic program and selection of possible drilling sites. The Company has requested bids for survey crews to begin work to lay out the initial 1,250 kilometer seismic program. Preliminary discussions have been held with potential drilling contractors and work on the first well is planned for the second quarter of 1998, depending on rig availability. The Company said it will now intensify its contacts and discussions with potential industry partners with a view towards joint exploration of the License Area.