Red Emperor to acquire an interest in large oil prospect in prolific Alaska North Slope
The Board of Red Emperor Resources NL (“Red Emperor” or the “Company”) is pleased to provide the following announcement with respect to an exciting new farm-in acquisition and upcoming drill program.
· Red Emperor to acquire and drill a significantly large oil prospect on the prolific Alaska North Slope
· The drill target is immediately adjacent to and a direct analogue of the Horseshoe-1/1A oil well drilled by the Repsol-led joint venture in 2017
· Horseshoe is part of the billion-barrel plus Nanushuk oil play-fairway, one of the largest conventional oil fields discovered in the US in more than 30 years*
· Red Emperor has formed a consortium with well-funded and experienced JV partners to execute a drill program in early 2019
· RMP’s working interest will be 31.5% in the prospect leases with the Company fully funded to meet its share of all work commitments associated with the acquisition
Red Emperor has executed a binding term sheet agreement that will see the Company participate in the drilling of a highly prospective Nanushuk oil trend exploration well on the Alaska North Slope in early 2019. Final definitive agreements are expected to be executed within 30 days with Red Emperor, along with its Consortium Partners, having exclusivity over the opportunity.
Red Emperor, along with Otto Energy Limited (ASX: OEL) (“Otto”) and 88 Energy Limited (ASX: 88E) (“88 Energy”) (collectively the “Consortium Partners”), have executed a binding term sheet agreement with Great Bear Petroleum Ventures II LLC (“Great Bear”) to acquire the majority of Great Bear’s working interest in four leases on the western flank of the Alaska North Slope, specifically ADL#s 391718, 391719, 319720 & 39172; collectively the “Western Blocks”.
* Oil Search Limited announcement 1 November, 2017
In consideration for acquiring the leases, the consortium partners will undertake the following:
· Provide a performance bond to the State of Alaska of US$3.0 million (RMP share US$1.05m) by 31 July 2018; and
· Drill an exploration well in the Western Blocks by 31 May 2019.
The Consortium Partners will provide the following consideration to Great Bear:
· Free carry Great Bear for a 10% working interest in the leases for the drilling, completion and production testing of an initial test well, including all associated costs such as permitting, ice road access and test production disposition;
· Pay US$500,000 (RMP share US$175,000) upon execution of the definitive agreements;
· Pay US$500,000 (RMP share US$175,000) upon receipt of final permits necessary to drill the initial test well, in any case by no later than 31 December 2018; and
· Provide an option for Great Bear to acquire a further 10% working interest prior to the initial test well by paying its pro-rata share of all costs of the initial test well or, if exercised within 6 months of completing the initial test well, by paying 200% of its pro-rata share of all costs of the initial test well.
The relevant interests in the Western Blocks under the commercial agreements (subject to regulatory approval by the State of Alaska) are as follows:
Red Emperor’s Managing Director, Greg Bandy, commented: “We are delighted to have been able to negotiate such an exciting new acquisition alongside quality consortium partners 88 Energy and Otto Energy. We would also like to thank Otto’s technical team for their hard work in generating the prospect and working with us to get this deal done. The impending drill program represents a significant opportunity for Red Emperor to gain exposure to one of the most prospective oil provinces in the world.”
Gracjan Lambert, Red Emperor’s CEO, commented: “I am extremely pleased to have joined the Company as CEO on the back of such exciting news. I look forward to our continued success building on the acquisition of this high-quality asset.”