CALGARY, June 2 /CNW/ - Proprietary Industries Inc. ("Proprietary or the
Company") and Loon Energy Inc. ("Loon") announced today that Proprietary's
wholly owned subsidiary Frontier Holdings Limited ("Frontier") has received
final approval from the Ministry of Petroleum and Natural Resources, of the
Government of Pakistan, to seven assignments of working interests in six
Exploration Licences and one Development and Production Lease from Petroleum
Exploration (Pvt.) Limited ("PEL"). These acquisitions were previously
announced by Proprietary and Loon on April 18, 2006.
The Assignment Agreements were executed today in Islamabad by officials
of the Government of Pakistan. Nigel McCue, President & CEO of Frontier, and
Graham Garner, President & CEO of Proprietary, met with Mr. Amanullah Khan
Jadoon, Minister of Petroleum & Natural Resources and Mr. Ahmad Wagar,
Secretary of Petroleum. "We were very pleased with the welcome we received
from the Government of Pakistan," said Mr. McCue, "the Minister assured us
that we can count on the Government's full support."
The seven assignments cover a total area of 1,845,723 acres, with four
interests being located in the prolific Central Gas Basin, two interests in
the Lower Indus Gas and Oil Basin and one in the northern oil bearing Potwar
Basin. The work programme associated with these interests calls for the
shooting of an estimated 800 kms of 2D seismic and 100 km(2) of 3D seismic and
the drilling of 10 exploration wells and 14 development wells over a period of
approximately 36 months.
Further details of the exploration and development interests acquired
from PEL, who is the Operator for each block, are as follows:
Central Gas Basin:
The Central Gas Basin ("CGB") is a prolific gas producing area located
within the onshore Middle Indus Basin of Pakistan. Several multi-tcf gas
fields have been discovered in the CGB some as recently as in the early
1990's. The main producing gas reservoirs are Palaeogene carbonates, e.g. the
Sui Main Limestone, plus the deeper, more recently discovered Lower Cretaceous
Lower Goru Sandstones. The Mari gas field (7.9 tcf of gas) and the Qadirpur
gas field (5.4 tcf of gas) are immediately adjacent to Frontier's interests.
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Development and Production Lease
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1) Block No 2768-6 ("Kandra Development and Production Lease")
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Frontier's Interest 37.5%
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(Other Interests: PEL 37.5%, Government Holdings (Private) Limited
("GHPL") - a division of the Ministry of Petroleum and Natural
Resources 25%)
The Kandra Gas Field is a multi-tcf gas resource which received
development approval by the Government of Pakistan in January 2006.
The Field was discovered in 1957 with a well that tested at a rate of
5.6 mmscfd of low Btu gas, three further wells were drilled which
tested at rates between 7.8 and 9.6 mmscfd, with the fourth well
being drilled in 2004. The Field is located approximately 25 kms away
from the city of Sukkur whose current electricity demand is being
partially met by the Sukkur Power Station. Frontier and its partners
are presently reviewing a number of development options for the Field
geared towards power generation including the possible refurbishment
of the Sukkur Power Station.
Frontier plans to commission a technical report in compliance with
National Instrument 51-101 in connection with its interest in the gas
field.
In consideration for the acquired interest Frontier will incur and
pay 75% of the cost of the first 6 development wells up to an amount
of US$2 million each. The development & production licence area
covers 71,383 acres.
Exploration Licences
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2) Block No. 2768-6 ("Kandra Exploration Licence") Frontier's
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Interest 47.5%
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(Other Interests: PEL 47.5%, GHPL 5%)
In consideration for the acquired interest, Frontier shall incur
and pay the next US$4 million of expenditures in drilling one well
to the Lower Goru reservoir which lies beneath the Kandra
Development and Production Lease at a depth of approximately
8,200 ft. Two wells drilled in 1957 and 1990 previously penetrated
the Lower Goru reservoir and sampled high Btu gas. The exploration
licence covers an area of 112,632 acres.
3) Block No. 2769-9 ("Mirpur Mathelo") Frontier's Interest 47.5%
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(Other Interests PEL 47.5%, GHPL 5%)
In consideration for the acquired interest, Frontier shall incur
and pay the next US$5 million of exploration expenditure to
include the acquisition of seismic and the drilling of one well to
a depth of approximately 11,200 ft. The Mirpur Mathelo Block lies
between, and is adjacent to, the multi-tcf Mari, Miano and
Qadirpur Gas Fields. The block covers 254,577 acres.
4) Block No. 2769-13 ("Salam") Frontier's Interest 50%
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(Other Interests: PEL 50%)
In consideration for the acquired interest, Frontier shall incur and
pay the next US$1.75 million of exploration expenditure to include
the acquisition of seismic and the drilling of one well to a depth
of approximately 7,200 ft. The Salam Block lies between, and is
adjacent to, the multi-tcf Qadirpur Gas Field and the Badar Gas
Field. The block covers 49,454 acres.
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Lower Indus Basin:
The Badin North and South Blocks are situated in the main oil and gas
province of Sindh in the onshore Lower Indus Basin and cover an area of
1,178,746 acres. The Badin North and South Blocks have been carved out of the
previous Badin Block which until recently was operated by British Petroleum.
The Badin Block contains 59 oil and gas discoveries which have been developed
under separate Development and Production Leases. The main producing
reservoirs are Cretaceous and Palaeocene sands.
<<
5) Block No. 2468-6 ("Badin IV North") Frontier's Interest 50%
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(Other Interests: PEL 50%)
In consideration for the acquired interest, Frontier shall incur and
pay the next US$3.9 million towards exploration expenditure to
include the acquisition of seismic and the drilling of one well to a
depth of 9,850 ft. The terms of the Concession Agreement requires,
amongst other things, the drilling of three wells, in total, to
depths of 7,546 ft to 10,171 ft.
6) Block No. 2468-5 ("Badin IV South") Frontier's Interest 50%
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(Other Interests: PEL 50%)
In consideration for the acquired interest, Frontier shall incur and
pay the next US$4.5 million towards exploration expenditure to
include the acquisition of seismic and the drilling of one well to a
depth of 8,200 ft. The terms of the Concession Agreement requires,
amongst other things, the drilling of four wells, in total, to depths
of 8,200 ft to 10,171 ft.
>>
Potwar Basin:
The Potwar Basin lies at the northern extremity of the Upper Indus Basin
and is the oldest producing basin in Pakistan. The Basin is predominately
oil-prone. Eocene and Palaeocene carbonates are the most productive reservoirs
although more recent exploration targets are the deeper Permian formations.
<<
7) Block No. 3272-12 ("Karsal") Frontier's Interest 50%
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(Other Interests PEL 50%)
In consideration for the acquired interest, Frontier shall incur and
pay the next US$4.5 million towards exploration expenditure to
include the acquisition of seismic and the drilling of one well to a
depth of 11,480 ft.
The Block contains the Karsal Field which produced 250,000 barrels of
oil from three wells in a period of eighteen months during the early
1950's. The Karsal Field is also adjacent, and possibly structurally
related to, the Balkassar Field located in the adjoining block; the
Balkassar Field has produced approximately 45 mmbbls of oil to date.
The Karsal Block covers 178,931 acres.
>>
As a result of the receipt of the Governmental approval, the previously
issued 14,958,838 common shares of Proprietary that were held in escrow
pending such Governmental approval will be released and distributed as to
7,479,419 to each of Loon Energy Inc. and Nemmoco Petroleum Limited
("Nemmoco"). Such shares were issued to Loon and Nemmoco and held in escrow as
consideration for the acquisition of Frontier by Proprietary from Loon and
Nemmoco.
About Proprietary:
Proprietary is a principal merchant bank based in Calgary, Alberta. It is
listed on the Toronto Stock Exchange trading under the symbol PPI.
About Loon:
Loon is an internationally focused oil and gas exploration company with
offices in Calgary, Alberta & Dubai, United Arab Emirates. Loon, with current
projects in Colombia, Slovenia, Syria and Brunei, is listed on the TSX Venture
Exchange trading under the symbol LEY.
Forward-looking statements: This document may contain statements about
expected or anticipated future events and financial results that are
forward-looking in nature and, as a result, are subject to certain risks and
uncertainties, such as general economic, market and business conditions, the
regulatory process and actions, technical issues, new legislation, competitive
and general economic factors and conditions, the uncertainties resulting from
potential delays or changes in plans, the occurrence of unexpected events, and
the capability of Proprietary or Loon to execute and implement their future
plans. Actual results may differ materially from those projected by
management. For such statements, we claim the safe harbour for forward-looking
statements within the meaning of the Private Securities Legislation Reform Act
of 1995.
