RNS Number:3764H
Financial Development Corp PLC
14 January 2005
For Immediate Release 14 January 2005
Financial Development Corporation plc
("FDC plc" or "the Company")
Proposed Acquisition of GGPC Gabon
Change of name to FirstAfrica Oil plc
Admission of the Enlarged Issued Share Capital to trading on AIM
And
Notice of Extraordinary General Meeting
Summary
Financial Development Corporation plc today announces that it has entered into
the Acquisition Agreement pursuant to which it has conditionally agreed to
acquire the entire issued share capital of and all of the Inter-Group Loans of
GGPC Gabon in a transaction valued at approximately #75m based on the value of
7.88p of FDC plc's shares at the time of their temporary suspension on 23
December 2004. Included in the transaction, the Company has also entered into
the Chad Option Agreement and Congo Option Agreement, under which the Company
shall be granted options to purchase the entire issued share capital of Energem
Chad and Energem Congo respectively.
It is anticipated that trading in the Company's Existing Ordinary Shares will
recommence on AIM this morning.
In view of the Acquisition, which constitutes a reverse takeover under the AIM
Rules, and to reflect more appropriately the Enlarged Group's proposed new
activities, the current Directors propose that the name of the Company be
changed to FirstAfrica Oil plc ("FirstAfrica Oil"). The proposed change of name
is conditional on Admission which is expected to occur on 8 February 2005.
An Extraordinary General Meeting will be held at 12 noon on 7 February 2005 to
approve the Acquisition and other related resolutions outlined in the AIM
Admission Document, copies of which were sent to Shareholders today.
Introduction to GGPC Gabon, GGPC Epaemeno, and the Chad and Congo Options
FirstAfrica Oil will have a specific focus on the acquisition and development of
discovered reserve opportunities in the form of marginal oil fields and
exploration opportunities in Africa that have commercial potential. Its initial
assets include rights relating to the EOV Permit Area and the Epaemeno
Exploration Block, summaries of which are included below:
*EOV Permit Area, which covers 105 km(2) of acreage, contains the EOV
Discovery, which was discovered by Marathon Oil Corporation ("Marathon") in
1999, and the EOV Development Area, which includes a number of other
prospects with commercial potential. Both EOV Discovery and the EOV
Development Area are located in shallow water offshore Gabon, West Africa,
and close to existing infrastructure owned by other operators.
*The Epaemeno Exploration Block is an onshore oil exploration licence
covering an area of 1,339 km(2) and is located south west of the town of
Lamberene in Gabon.
The Chad option relates to the Chad Concession Agreement entered into by Energem
Petroleum Chad Limited, a wholly owned subsidiary of Energem Resources Inc.
("Energem"), a resources company listed on the Toronto Stock Exchange with
activities in the energy and mining sectors in a number of African countries, in
relation to 259,664 km(2) in the Chari-Ouest and Largeau basins in the Republic of
Chad. The Chari-Ouest concession area of approximately 8,181 km(2) lies in the
centre of the Doba Basin adjacent to discoveries and production managed by
ExxonMobil and with access to pipeline infrastructure.
The Congo Option relates to the rights to Marine XI Block in Congo Brazzaville,
a shallow water offshore block in Congo Brazzaville, to be granted to GGPC
Montreal a subsidiary of Energem. The intent to award the rights to Marine XI to
GGPC have been confirmed by written notification from the Ministry of
Hydrocarbons of the Republic of Congo (Brazzaville).
Commenting on the Acquisition Agreement, Gordon Hall, Executive Chairman of
Financial Development Corporation, said:
"We are delighted to offer our shareholders a unique opportunity through
FirstAfrica Oil, which we believe has the potential to become a significant
upstream oil and gas business in the rapidly developing hydrocarbon market in
Africa".
Commenting on the transaction, Brian Menell, proposed Chairman of FirstAfrica
Oil plc said:
"The listing of FirstAfrica Oil is the first step in developing a large,
pan-African focussed upstream oil and gas company. We believe that the quality
of our assets, all of which are located in proven hydrocarbon regions, and the
listing in London, will provide FirstAfrica Oil with the platform to develop the
business into a significant pure African oil and gas company."
Expected timetable of Principal Events
Dispatch of AIM Admission document 14 January 2005
Latest time and date for receipt of Forms & Proxy for the EGM 12 noon on 5
February 2005
EGM of the Shareholders 12 noon on 7
February 2005
Admission effective and dealing expected to commence on AIM 8am on 8
February 2005
Expected date for CREST accounts to be credited 8 February 2005
Expected date for dispatch of share certificates for New By 11 February
Ordinary Shares 2005
Placing Statistics
Number of Existing Ordinary Shares 361,365,823
Number of new Ordinary Shares being issued pursuant to the 956,390,942
Acquisition
Number of new Ordinary Shares being issued pursuant to the 150,375,884
Options
Number of new Ordinary Shares being issued to the Independent
Non-
Executive Directors (Bonus Shares) 2,857,142
Number of new Ordinary Shares being issued to Evolution
(Evolution
Shares) 12,857,142
Number of Ordinary Shares in issue on Admission 1,483,846,933
Transaction value per ordinary Share 3.50p
Market capitalisation of the Company on Admission at the
transaction
value Approximately
#51.93m
New Ordinary Shares, Bonus Shares and Evolution Shares
expressed as a
percentage of the Enlarged Issued Share Capital 75.65 per cent.
For further information please contact:
Financial Development Corporation plc (+44) 207 245 1100
Paul Foulger, Finance Director
FirstAfrica Oil plc (+27) 83 643 2633
Brian Menell, Chairman
Mike Jones, Chief Executive
Evolution Securities (+44) 20 7071 4300
Steve Roberts
Tim Redfern
Daniel Stewart (+44) 207 374 6789
Ruari McGirr
Buchanan Communications (+44) 207 466 5000
Bobby Morse
Dr. Ben Willey
The following has been extracted from the AIM Admission Document, copies of
which will be available, for collection only, free of charge to the public from
Daniel Stewart, 48 Bishopsgate, London EC2N 4AJ, during normal office hours on
any weekday.
1. INTRODUCTION
Since the disposal of the Company's remaining trading businesses on 25 October
2004, the Current Board has been considering the most appropriate way to enhance
shareholder value. The Current Board has looked at a number of opportunities
across a broad range of sectors.
The Company has entered into an Acquisition Agreement pursuant to which it has
conditionally agreed to acquire the entire issued share capital of and satisfy
all of the Inter-Group Loans of GGPC Gabon, for a consideration of approximately
#33.47 million to be satisfied by the issue of the Acquisition Consideration
Shares. It is anticipated that trading in the Company's Existing Ordinary Shares
will recommence on AIM on 14 January 2005.
In addition to entering into the Acquisition Agreement, the Company has also
entered into the following agreements conditional on Admission:
(i) the Chad Option Agreement and the Congo Option Agreement,
pursuant to which the Company shall be granted call options the exercise of
which are subject to the fulfillment of certain conditions precedent to purchase
the entire issued share capital of and satisfy all of the shareholder claims of
Energem Chad and GGPC Congo respectively. The consideration for entering into
the Chad Option Agreement and the Congo Option Agreement shall be satisfied by
the issue of the Chad Option Consideration Shares and Congo Option Consideration
Shares respectively, and
(ii) the Services Agreement pursuant to which Energem will
second, on a part-time basis Brian Menell (acting as Chairman) and Robert Rainey
(acting as Chief Financial Officer) and, on a full time basis, Michael Jones
(acting as Chief Executive Officer) to the Company and shall offer a logistics
platform to assist the Company to develop upstream oil and gas activities in
Africa.
Upon the Acquisition Agreement becoming unconditional and the conversion of the
Institutional Convertible Debentures, the Concert Party (which for the avoidance
of doubt includes GGPC Montreal as the vendor of GGPC Gabon) will hold
756,761,935 Ordinary Shares representing 51.00 per cent. of the Entire Issued
Share Capital. In addition certain arm's length institutional investors will
hold 350,004,891 Ordinary Shares representing 23.59 per cent. of the Enlarged
Issued Share Capital. The existing 361,365,823 Ordinary Shares will represent
24.35 per cent. of the Enlarged Issued Share Capital.
The Acquisition together with the issue of the New Ordinary Shares pursuant to
the Options, constitute a reverse takeover under the AIM Rules. The Acquisition,
the grant of the Options and the issue of the New Ordinary Shares will be
conditional, inter alia, upon the approval of Shareholders being obtained at the
Extraordinary General Meeting and Admission. If the Resolutions are duly passed
at the Extraordinary General Meeting, and the other conditions are met the
trading of the Existing Ordinary Shares on AIM will be discontinued, and the
Enlarged Issued Share Capital will be admitted to trading on AIM. Dealings on
AIM in the Enlarged Issued Share Capital are expected to commence on 8 February
2005. If the Resolutions are not passed, or any of the other conditions are not
met, dealings in the Existing Ordinary Shares on AIM will continue.
Following completion of the Agreements and Admission it is anticipated that the
Company will have cash resources of approximately #5.9 million (net of all costs
associated with Admission).
In order to reflect the change in the nature of the Company's business, which
would arise from the Acquisition, it is proposed that the name of the Company be
changed to FirstAfrica Oil plc.
2. BACKGROUND TO AND REASONS FOR THE ACQUISITION
The Current Directors have been seeking an acquisition to take the Company in a
new direction and enhance shareholder value. The proposed acquisition of GGPC
Gabon (together with its wholly owned subsidiary GGPC Epaemeno) is the
culmination of this process. It is the intention of the New Board to create an
entirely African-focused 'upstream' oil business (i.e. focused on oil
exploration and extraction as opposed to 'downstream' which refers to the
refining, marketing and distribution of petroleum products).
To this end the Current Directors have been in discussions to acquire the entire
issued share capital of GGPC Gabon, which is wholly owned by GGPC Montreal, a
company majority-owned by Energem.
Energem is a resources company listed on the Toronto Stock Exchange with
activities in the energy and mining sectors in a number of African countries.
Energem has a mixture of assets and projects across a number of sectors
including mid-stream and upstream oil, mining, logistics and other
energy-related manufacturing. In the process of conducting its upstream oil
activities Energem has decided that the potential of these assets can be best
realised in a separate, listed, dedicated upstream oil business. Energem
believes that by disposing of GGPC Gabon, granting the Options and creating a
separate entity focused on upstream oil as opposed to being within a larger
group with activities spread across a broad range of sectors, the value of these
upstream oil assets can be more readily identified and assessed by directors,
shareholders and investors alike. Energem believes that as a separate entity the
upstream oil business will be able to focus on those opportunities that are
exclusive to this sector and which might otherwise be missed were the business
to remain part of a larger group with a more diverse asset portfolio and
business mix.
3. INFORMATION ON GGPC GABON AND GGPC EPAEMENO
The rationale behind the development of GGPC Gabon and GGPC Epaemeno has been a
specific focus on the acquisition of discovered reserve opportunities in the
form of marginal oil fields and exploration opportunities that have commercial
potential.
(a) Marginal oil fields
These are assets that have undergone drilling and fairly extensive appraisal
(often by one of the major oil companies) and that with innovative and cost
effective technology have the potential to be developed into economically viable
producing oil and/or gas production streams. Marginal oil fields by definition
are proven hydrocarbon resources but have been determined by others to be
uneconomical or not strategic to portfolio management. This is usually due to
other oil companies being unable to create the necessary economic parameters for
development for reasons including relatively low production volumes, high
corporate overheads, lower commodity prices and a lack of infrastructure access
and/or market access. However, due to work previously undertaken in these
fields, oil reserves have been proven and often the economic issues are
surmountable provided that the new developers can quantify the economic
parameters and are able to make the projects economically viable with a more
innovative approach to the development strategy and by overcoming some of the
issues that existed historically. The opportunities are typically niche and
often below the ambitions of the major oil companies. However, they represent
real opportunities for companies with the right skills, focus, experience and
cost base.
EOV Permit Area
On 24 February 2004 Energem announced the signing by GGPC Gabon in Libreville,
Gabon, of the EOV PSA with the Government of the Republic of Gabon. The 105 km(2)
EOV Permit Area contains the EOV Discovery and a number of other prospects with
commercial potential being the EOV Development Area. The EOV Discovery is
located in shallow water and is close to existing infrastructure owned by other
operators.
(i) EOV Discovery Area
The EOV Discovery is located approximately 6 miles offshore Gabon in 65 ft of
water and has been the focus of initial and technical and commercial interest in
the EOV Permit Area. The EOV Discovery is located on the southern limit of the
proven and prolific Ogooue Delta oil province of Gabon and is covered by a 3-D
seismic survey, shot and processed in 1999 by Marathon and which has recently
been re-interpreted by ECL.
The EOV Discovery has been proven up by three wells which were drilled by
Marathon in the late 1990s, with two of the wells remaining suspended. ECL has
estimated that the gross economically recoverable Proved plus Probable reserves
("2P") have a value of US$11.6 million.
(ii) EOV Development Area
Marathon mapped three un-drilled prospects within the EOV Development Area and
the prospects all lie either close to the EOV Discovery or within a 10 km
radius. In the event of a discovery of economically viable oil resources, GGPC
Gabon is entitled to up to 68 per cent. of the net revenues from any oil
produced in the EOV Permit Area following commercialisation and approval of a
field development plan. ECL has estimated risked recoverable resources of 20
million stock tank barrels ("MMstb").
(b) Potential resources in areas of high interest
These are assets in regions of known hydrocarbon production where the
probability of discovery of economically viable hydrocarbon reserves is high but
as yet not determined due to limited exploration activity, geological test work
and technical data, and where the size and economic viability of any discovery
is not proven. In this category, in addition to the prospects under the EOV PSA,
GGPC Epaemeno has secured the Epaemeno PSA in onshore Gabon.
Epaemeno Exploration Block
On 17 November 2004 GGPC Gabon was awarded the Epaemeno PSA for onshore oil
exploitation in Gabon, which was formerly known as the JT 2000 exploration
block, for an initial sign on bonus of US$500,000 which has been paid to the
Government of Gabon.
The block covers an area of 1,339 km(2) and is located south west of the town of
Lamberene in Gabon and directly north of both the Awoun and Maghena blocks and
is in the onshore portion of the Gabon sedimentary basin. The basin is limited
to the east by the granitic basement and to the west by the edge of the 200
meter depth contour of the continental shelf and the width of the basin is
approximately 170 km. The Epaemeno Exploration Block is located in the north sub
basin of the sedimentary basin, to the west of Lamberene.
The Epaemeno Exploration Block includes the bulk of the ex-Elf Gabon operated
RGA 5 block and the northern portion of the Ex-RGA 7 block, which is now called
the Awoun block. Prior to signing the Epaemeno PSA, GGPC Montreal evaluated the
Epaemeno Exploration Block and concluded that the area contained possible
drillable prospects already identified by Elf on 2-D seismic. The Epaemeno
Exploration Block is on a geological trend with discovered onshore fields in the
onshore basin, including Rabi Kounga, a producing oil field operated by Shell.
GGPC Epaemeno was awarded 100 per cent. of the Epaemeno PSA as operator of the
Epaemeno Exploration Block.
In the event of a discovery of economically viable oil resources fiscal terms
provide for, GGPC Epaemeno entitlement of up to 65 per cent. of the net revenues
from any oil produced in the area following commercialisation and approval of a
field development plan.
4. INFORMATION ON CHAD AND THE CHAD OPTION
(a) Chad
On 9 December 2004 Energem announced that it had entered into the Chad
Concession Agreement (through its subsidiary Energem Petroleum, a wholly owned
subsidiary of Energem), this being an upstream oil and gas exploration,
exploitation and transport concession agreement in relation to 259,664 km2 in
the Chari-Ouest and Largeau basins in the Republic of Chad. On 10 December 2004
such rights were assigned to Energem Chad.
The Chari-Ouest concession area of approximately 8,181 km2 lies in the centre of
the Doba Basin adjacent to discoveries and production managed by ExxonMobil and
with access to pipeline infrastructure.
The areas covered by the Chad Concession Agreement were awarded to Energem after
a competitive tender and negotiation process.
The Chad Concession Agreement was entered into between Energem Petroleum and the
Government of Chad on 16 October 2004 and confirmed by Presidential Decree No.
600/PR//NP/04 on 8 December 2004.
(b) The Chad Option
Pursuant to the Chad Option Agreement, Energem Petroleum has agreed to grant to
the Company, subject to the fulfilment of certain completion conditions, an
option to acquire the entire issued share capital of and all of the Inter-Group
Loans of Energem Chad. The call option will be exercisable within 3 months
following receipt by the Company and Energem Petroleum of independent
valuations, and unless otherwise agreed if the call option is not completed
within such three month period the Chad Option will lapse forthwith.
Upon grant of the Chad Option becoming unconditional upon Admission, the Company
shall pay to Energem Petroleum a non-refundable deposit of US$5,000,000 to be
discharged by the issue of 75,187,942 Chad Option Consideration Shares in the
Company.
The purchase price in respect of the Inter-Group Loans shall be the face value
thereof and in respect of the Energem Chad shares shall be calculated by taking
the sum of the averages of the valuations to be undertaken by two independent
valuators (chosen from a panel of three), thereafter divided by two, thereafter
less the amount of the non-refundable deposit and thereafter less a discount of
20 per cent.
The Chad Option Agreement is conditional, inter alia, on Admission.
5. INFORMATION ON CONGO AND THE CONGO OPTION
(a) Republic of Congo
Marine XI Shallow Offshore Notification - The Republic of Congo (Brazzaville)
On 15 December 2004 Energem announced that, following a process of negotiation
and tender, its subsidiary GGPC Montreal had received written notification from
the Ministry of Hydrocarbons of the Republic of Congo (Brazzaville) that the
Interministerial Committee has approved the award of the Marine XI shallow water
offshore oil block ("Marine XI Block") operatorship to GGPC Montreal. This
notification will now enable GGPC Montreal to proceed to finalisation of a
production sharing agreement with the Government of the Republic of Congo in
respect of the Marine XI Block.
(b) The Congo Option
Under the terms of the Congo Option Agreement, GGPC Montreal has agreed to grant
to the Company, subject to the fulfilment of certain completion conditions, an
option to acquire the entire issued and to be issued share capital of and all of
the Inter-Group Loans of GGPC Congo. The call option will be exercisable within
three months following receipt by the Company and GGPC Montreal of independent
valuations, and unless otherwise agreed, if the Congo Option is not completed
within such three month period, the Congo Option will lapse forthwith.
Upon grant of the Congo Option Agreement becoming unconditional upon Admission,
the Company shall pay to GGPC Montreal a non-refundable deposit of US$5,000,000
to be discharged by the issue of 75,187,942 Congo Option Consideration Shares.
The purchase price in respect of the Inter-Group Loans shall be the face value
thereof and in respect of the GGPC Congo shares shall be calculated by taking
the sum of the averages of the valuations to be undertaken by two independent
valuators (chosen from a panel of three), thereafter divided by two, thereafter
less the amount of the non-refundable deposit and thereafter less a discount of
20 per cent.
The Congo Option Agreement is conditional, inter alia, on Admission.
6. SERVICE AGREEMENT
The Services Agreement will become effective upon Admission and will continue
for a fixed period of 24 months.
Energem will make available to the Company its skill, know-how, support networks
and relationships to assist the Company with its upstream oil and gas activities
in Africa.
Energem shall grant to the Company a right of first refusal in respect of any
secured rights granted to the Energem Group in relation to the exploitation and/
or development of upstream oil and gas sites in Africa.
In consideration for the secondments, the provision of services and the granting
of the right of first refusal as set out above, the Company has agreed to pay
Energem the following fixed fees:
* US$ 250,000 per month during the first year of the agreement; and
* US$ 125,000 per month during the second year of the agreement.
7. PROPOSED CHANGE OF NAME
In view of the Acquisition, and to reflect more appropriately the Enlarged
Group's proposed new activities, the Current Directors propose that the name of
the Company be changed from FDC plc to FirstAfrica Oil plc. The proposed change
of name is conditional on Admission which is expected to occur on 8 February
2005.
8. CURRENT DIRECTORS AND PROPOSED DIRECTORS
On completion of the Proposals, Paul Foulger will resign as a director of the
Company and Brian Menell, Michael Jones, Robert Rainey, His Highness Sheikh
Maktoum Hasher Maktoum Al Maktoum, Alain Mizelle and Dr Anthony Marsh will join
the Company as directors. Gordon Hall will cease to be Chairman and will become
Senior Independent Non-Executive Director.
Under the terms of the Services Agreement, Brian Menell, Michael Jones and
Robert Rainey will be seconded to the Company for a minimum period of 12 months.
Brian Menell and Robert Rainey will devote 40 per cent. of their working time to
the Company. Michael Jones shall provide his services to the Company on a full
time basis. However, it is the Company's intention prior to the expiry of the
secondments to appoint an independent executive team. At which point the
positions of Brian Menell, Michael Jones and Robert Rainey shall be reviewed.
(a) Current Directors
Gordon Hall (Retiring Executive Chairman and proposed Senior Independent
Non-Executive Director) (aged 62)
Mr. Hall joined the FDC plc board on 20 October 2004. He is currently
Non-Executive Chairman of Osmetech plc and he has held a number of high profile
board positions, with both public and private companies. Previous directorships
include Ntera Limited, Bio Stat Limited, Shield Diagnostics plc and Andaris
Limited.
Paul Foulger (Retiring Finance Director) (aged 35)
Mr. Foulger joined the board of the Company on 23 September 2002. From 1997 to
2000, Mr. Foulger was Finance Director at Elsevier Science Ltd, a subsidiary of
Reed Elsevier plc. From July 2000 to July 2002 he was Finance Director for a
Venture Capital backed digital picture library and has since held a number of
Directorships in a consultancy capacity during his time at FDC plc. Mr. Foulger
was one of two directors who led the Hansard management buy-out from the Company
in October 2004.
(b) Proposed Directors
Brian Menell (Executive Chairman) (aged 39)
Mr. Menell is currently the Executive Chairman of Energem. Mr. Menell was
previously a partner in control and executive director of Anglovaal Mining (Pty)
Ltd, a diversified mining company engaged in precious metals, base metals and
ferrous metals across Southern Africa. At Anglovaal, Mr. Menell was responsible
for all exploration, new business development, corporate finance and M&A
activity. Prior to joining Anglovaal, Mr. Menell spent eight years with the De
Beers Group, holding various executive positions in London, Antwerp, Namibia and
South Africa. Mr. Menell has extensive experience of natural resource projects
and transactions throughout much of the African Continent.
Michael Jones (Chief Executive Officer) (aged 55)
Mr. Jones became Energem's chief operating officer for oil projects in March
2004. Mr. Jones is a mechanical engineer and a member of the American Society of
Mechanical Engineers. Prior to joining Energem he was with Houston based energy
company, Marathon, where he was involved over a period of 20 years in
supervisory and management positions involving offshore oil and gas field
developments, project management, production operations, export pipeline systems
and marketing and crude oil sales strategy. His most recent assignment was as
Vice President of Marathon International Petroleum Ltd. (a subsidiary of
Marathon) where he headed the sub-Saharan regional office as General Manager
based in South Africa, with responsibility for all business development
activities.
Prior to joining Marathon, Mr. Jones spent eight years with Bechtel Group
companies working on various international assignments involving oil and gas and
other major construction projects.
Mr. Jones will be responsible for the Company's commercialisation and
development of the Company's upstream oil assets.
Robert Rainey (Chief Financial Officer) (aged 53)
Mr. Rainey is currently the Chief Financial Officer and a Director of Energem.
Mr. Rainey qualified as a Chartered Accountant with PricewaterhouseCoopers
(formerly Cooper Bros & Co.). He then moved to the South African listed Barlows
Group, where he was Divisional Financial Director of their chicken broiler
rearing, farming and processing operations. Mr. Rainey entered the mining and
property industries in the late 1980s. Other than for a two year period between
2001-2002 during which he served as Chief Financial Officer of Southern Era
Resources Ltd., a Canadian listed Company, he has been the Financial Director or
Chief Executive of a number of companies listed in Johannesburg, Canada and/or
London and mainly involved in the mining, resources and property industries
internationally.
Alain Mizelle (Director of Exploration) (aged 39)
Mr. Mizelle holds an MSC (Earth Sciences) and an MSC (Engineering) from the
University of Witwatersrand. Mr. Mizelle is the founder and present Chief
Executive Officer of Montreal-based GulfofGuinea Petroleum Corporation Inc. and
has close to a decade of experience of petroleum geology and exploration in West
and Central Africa, having previously worked for Energy Africa Limited.
His Highness Sheikh Maktoum Hasher Maktoum Al Maktoum (Deputy Non-Executive
Chairman) (aged 27)
Sheikh Maktoum, a member of Dubai's ruling family, received a BSBA in Finance
with Honors from Suffolk University, Boston MA, USA. Sheikh Maktoum also serves
as CEO of Al Fajer Group which deals in oil barrel manufacture, import/export,
textiles, tradeshow management, electromechanical engineering, travel and
tourism and construction. As director of Shadar Holdings he is partner in Virgin
Megastores, Promod, Pole and Bear, and Bershka in the UAE.
Sheikh Maktoum is the Founder, President and Chairman of the A1 Grand Prix
racing series which is to be promoted as ''the World Cup of Motorsport''.
Dr Anthony Marsh (Independent Non-Executive Director) (aged 63)
Dr Marsh is a geologist (Ph.D. in Antarctic geology, Birmingham University) who
has had over 30 years experience in the upstream oil and gas business with
Shell. After a range of technical and management assignments in exploration in
Africa, the Middle and Far East and the UK, he became manager for new
exploration ventures in Africa, the Middle East and South Asia, based in the
Netherlands. Subsequently, he was responsible for Shell's Salym (western
Siberia) oil field development project. In 1995 to 99, he was manager of Shell's
upstream businesses in China, based in Beijing. He is the founder of Marsh and
Consultants Limited which provides technical resource management services to the
upstream industry.
9. USE OF FUNDS AND WORKING CAPITAL
The Company will utilise its estimated cash of approximately #5.9 million (net
of all costs associated with Admission) to:
(a) complete the phased exploration and development plans for the EOV Field;
(b) gather data and develop a work program for the Epaemeno Exploration Block;
and
(c) meet additional expenses associated with the Proposals
The Company does not have sufficient funds to develop the assets that it is
acquiring pursuant to the Acquisition, to exercise the Options or to acquire
further assets it may be offered by Energem under the terms of the Services
Agreement. Once the Company has completed its initial development strategy
outlined above additional funds will need to be raised in order for the Company
to implement further asset acquisitions and development programmes.
Under the terms of the Chad Option Agreement and the Congo Option Agreement, the
sale of the entire issued share capital of and all of the Inter-Group Loans of
Energem Chad and GGPC Congo to the Company are conditional on, inter alia, the
Company having or raising the funds necessary to make such a purchase. At this
stage the Company does not anticipate having sufficient funds at the relevant
time and accordingly, in order satisfy these conditions precedent to completion
of either of the Options, the Company will need to raise additional funds and
accordingly any necessary shareholder approvals will be sought at the relevant
time. Additional funds may be raised by various means including, but not limited
to, entering into point venture agreements with third parties or debt or equity
financing.
10. CURRENT TRADING AND PROSPECTS
The Company's objective is to build a diversified portfolio of exploration,
appraisal and production assets in Africa and in particular , West Africa.
Through the Services Agreement and the expertise and resource, including an
African relationship network, to be provided by Energem, the Company will
initially focus its efforts in Gabon, Chad and the Republic of Congo and seek to
add value to the EOV Field and Epaemeno Exploration Block assets. However,
Energem is also evaluating a number of other opportunities in West Africa and if
and when the assets are assigned to Energem these opportunities will be offered
to the Company to evaluate. The Company will have a right of first refusal to
acquire these interests from Energem under the terms of the Services Agreement.
Subject to the appropriate approvals from the Company's independent directors
(and independent Shareholders, if Shareholder approval is required) these assets
will vend-in to the Company at a value to be determined by the Company and
Energem. The exercise of such rights may be conditional upon the Company's
ability to raise sufficient funds.
The current status and prospects of the Company's proposed interests are set out
below:
a) EOV Permit Area
Since the signing of the EOV PSA in February 2004, GGPC Gabon has been actively
assessing historic data, technical information and drilling results provided by
the Government of Gabon and secured from Marathon, the previous licence holder.
GGPC Gabon's focus has been on determining a development strategy for near term
oil production from the EOV Discovery. In this respect economic screening and
front end engineering design studies have been undertaken by Petrofac
Engineering Ltd and ECL. The results of this work are still being reviewed by
GGPC Gabon but, providing operating costs can be optimised, the preferred
strategy is to implement a phased development programme involving a pre-drilled
appraisal/production well, followed by the initiation of a full development
programme.
(b) Epaemeno Exploration Block
Since 17 November 2004 when GGPC was awarded the Epaemeno PSA, GGPC has acquired
a data package, which comprises geological and geophysical information and
further data gathering is intended before a full appraisal of the Epaemeno
Exploration Block is undertaken during the first half of 2005 with a view to
determination of a planned drilling programme.
(c) Chad
Over the next few months Energem will seek to obtain the historical data that is
held by the Chad Government. Once Energem has obtained and analysed sufficient
data the Company may exercise the Chad Option under which the Company has the
right to acquire such rights under the terms of the Chad Option.
(d) Republic of Congo (Congo Brazzaville)
Since signing the letter of intent with the Congolese government on 8 November
2004 (Marine XI Notification) in relation to entering into a production sharing
agreement in relation to offshore Congo, GGPC Montreal has been gathering
further data and continuing final negotiations regarding the fiscal terms of the
proposed production sharing agreement. Subject to agreeing the terms of the
production sharing agreement, GGPC Montreal will evaluate the development
programmes most suitable to this licence area prior to offering it to the
Company for its own assessment. The Company shall have the right to acquire the
rights to this concession under the terms of the Congo Option.
11. EXTRAORDINARY GENERAL MEETING
The Extraordinary General Meeting to be held at the offices of McGrigors, 5 Old
Bailey, London EC4M 7BA on 7 February 2005 at 12 noon.
12. LOCK-IN AND ORDERLY MARKET ARRANGEMENTS
Certain of the proposed holders of the Consideration Shares representing in
aggregate a total 51.00 per cent. of the Enlarged Issued Share Capital have
entered into Lock-In Deeds. Under the terms of such Lock-In Deeds they have
agreed with Evolution Securities that they will not dispose of any Ordinary
Shares or interests therein held (save in limited circumstances) for the Lock-In
Period. The relevant proposed holders of the Consideration Shares have also
undertaken not to dispose of such shares for the 12-month period following the
expiry of the Lock-In Period without first giving not less than 5 days' notice
to the Company and Evolution Securities. Such a disposal shall be brokered
through Evolution Securities and be made after a reasonable period of prior
consultation with and taking into account the view Evolution Securities with a
view to maintaining an orderly market in the issued ordinary share capital of
the Company.
13. RECOMMENDATION
The Current Directors, who have been so advised by Daniel Stewart, consider that
the Proposals and the Waiver are fair and reasonable and in the best interests
of the Company and its shareholders as a whole. In providing advice to the
Current Directors, Daniel Stewart has taken into account the Current Directors'
commercial assessments.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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