The Board of Red Emperor Resources NL (“Red Emperor” or the “Company”) provides the following commentary and Appendix 5B for the period ending 31 December 2017.
California
During the quarter, the Joint Venture formed to identify a number of strategic leases in California, prospective for oil & gas, made considerable progress in the complicated process of conducting the title searches required to identify and confirm the legal owners of the relevant mineral leases. The work required to complete a full chain of title takes time, however the majority of this work is now complete. Owners have now been presented with formal lease agreements and the JV hopes execution of these agreements will start occurring over the coming week(s).
While the specific location of the leases will remain confidential until a material amount of the prospect area(s) can be acquired, the Company again advises that in return for funding 100% of the lease acquisition costs, as well as the acquisition and reprocessing of relevant seismic data, Red Emperor will earn a 60% interest in the newly established Joint Venture and any subsequent leases acquired. The total budget, inclusive of Landman fees, for the proposed acquisition is USD640,000, after which Red Emperor will be responsible for its 60% equity interest. Despite a delay in timing, the JV remains within budget to complete these acquisitions and looks forward to updating the market in the coming weeks.
Philippines (SC 55)
Red Emperor continues to be frustrated by the process and progress of the Philippines Department of Energy and the lengthy delays associated with the ratification of the Company’s equity interest increase in Block SC55. To this end, Red Emperor is now considering the merits of maintaining its equity interest in the Block and has sought advice regarding the potential disposal of its interest. Despite participating in a USD25m exploration well (Hawkeye) within the block in 2015 and contributing in excess of AUD5m towards drilling costs, the board must weigh the costs of maintaining the Block against its materiality in the current environment and the other assets currently being acquired by the Company.
Over USD50m has been spent exploring the block to date and a number of drill-ready targets remain, including the “Cinco” gas prospect which has a best estimate prospective resource of 1.6tcf recoverable gas.
Georgia
Red Emperor had negotiated and in principally agreed to sell its 20% interest in Strait Oil & Gas to Range Resources Limited for a nominal sum and a royalty, however the completion of this sale was delayed by Range’s re-admission process to the AIM in the UK. Red Emperor remains in discussion with Range, although it acknowledges that the consideration being discussed is not material to the Company.
Full financial statement for the quarter ending 31 December 2017 can be read here.
