Regal Petroleum PLC
27 June 2003
FOR IMMEDIATE RELEASE 27 June 2003
REGAL PETROLEUM PLC
Heads of Agreement Signed to Acquire 60.3 per cent Interest in Kavala Oil S.A.
The directors are pleased to announce that Regal Petroleum plc ('Regal' or 'the
Company') has signed a heads of agreement ('Heads of Agreement') in connection
with the proposed acquisition ('Proposed Acquisition') by Regal of 90 per cent.
of the entire issued share capital of Eurotech Services S.A. ('Eurotech') for a
total consideration to be satisfied by the issue of up to 5 million ordinary
shares of 5p each in the capital of the Company.
Eurotech is a private company incorporated in Greece, which owns 67 per cent. of
the entire issued share capital of Kavala Oil S.A. ('Kavala'). Kavala is a
private company incorporated in Greece with assets which comprise a producing
oil project in the North Agean Sea. Following completion of the Proposed
Acquisition, Regal will indirectly own 60.3 per cent. of the entire issued share
capital of Kavala.
Exclusivity: The Heads of Agreement grants Regal the exclusive right to proceed
with the Proposed Acquisition until 30 September 2003.
Conditions Precedent: Completion of the Proposed Acquisition is subject to,
inter alia, completion of satisfactory due diligence by Regal and formal legal
documentation being entered into by the parties.
Loan Facility: As part of the Proposed Acquisition, Regal will agree to provide
Kavala with a US$30 million loan facility to develop its oil fields and increase
production. Regal is currently considering a number of debt and equity funding
alternatives to fulfil this obligation.
Project Summary: Kavala has the exclusive right to exploit and develop three
oilfields with proven oil reserves known as Prinos, Prinos North and Epsilon and
one exploration and development field known as Kallirachi. Kavala has the
exclusive right to use and operate a state owned oil facility capable of
producing 40,000 barrels of oil per day including all production, processing,
loading and transport infrastructure.
Financial Summary: Kavala's current daily oil production is approximately 5,000
barrels per day with the most recent shipment being sold at a price of US$29 per
barrel with no transportation costs. Kavala also generates revenue from the
sale of sulphur and electricity. Revenue from crude oil sales in 2002 was EUR
33.2 million (2001 - EUR 32.1 million).
Reserves Summary: Independent consultants Troy Ikoda Limited have audited the
reserves and provided the following independent opinion:
Prinos and Prinos North fields Original proven and probable oil in place of 310 million barrels. Remaining
recoverable 2P reserves of 11.08 million barrels.
Epsilon field Proven and probable oil in place of 50 million barrels. Remaining recoverable 2P
reserves of 12.42 million barrels.
Kallirachi exploration and No proven reserves. Expected to contain in excess of 280 million barrels of oil in
development field place (with a potential upside of 631.85 million barrels in place) and in excess of
96 million barrels of recoverable oil (with a potential upside of 227.39 barrels of
recoverable oil).
The Company believes that the Epsilon Field has a possible but as yet unproven
extension to the east of the main field. This contingent resource is estimated
to be 34.5 million barrels of oil in place in a recent Epsilon Field Development
Study ('Epsilon Study') (resource size not audited by Troy-Ikoda).
Production and Development Plan: Existing production is approximately 5,000
barrels per day. Kavala is proposing to carry out an in-fill drilling programme
in Prinos and Prinos North which is forecast to increase production to in excess
of 12,000 barrels per day.
Based on the Epsilon Study, Kavala will also consider further development of the
Epsilon field, which is expected to provide an additional 5,000 barrels per day.
Once the Kallirachi field has been drilled and proven, the second stage
development of Kallirachi is expected to yield a daily production of 30,000
barrels per day.
After implementation of the above production and development plan the Company is
estimating a daily production volume in excess of 45,000 barrels per day.
Board of Directors: It is proposed that Mr Guenter Nolte (Chief Executive
Officer - Regal) and Mr Glenn Featherby (Finance Director - Regal) will be
appointed to the Board of Kavala and that Mr Nikolaos Loutsigkas (President and
Managing Director - Kavala) will be appointed to the Board of Regal.
For further information, please contact:
Regal Tel: 020 7647 6622
Frank Timis, Executive Chairman
Glenn Featherby, Finance Director
Buchanan Communications Tel: 020 7466 5000
Tim Thompson / Catherine Miles
This information is provided by RNS
The company news service from the London Stock Exchange
Translate
