Pacific Energy Development Announces Agreement to Acquire 34% Interest in 380,000 Acre Oil & Gas Producing Asset Located in t...
September 16 2013 - 4:00PM
Business Wire
Pacific Energy Development (NYSE MKT:PED), an energy company
engaged in the acquisition and development of strategic high-value
energy projects in the U.S. and Asia, today announced the entry
into Kazakhstan through an agreement to acquire an approximate 34%
indirect interest in Aral Petroleum Capital Limited Partnership
(“Aral”), a Kazakhstan entity which holds a 100% operated working
interest in a production license covering the contract area issued
by the Republic of Kazakhstan that expires in 2035 in western
Kazakhstan (the “Contract Area”), from Asia Sixth Energy Resources
Limited (“Asia Sixth”), which Contract Area covers 380,000 acres
within the North Block located in the Pre-Caspian Basin. This basin
is the largest currently producing basin in Kazakhstan.
The Contract Area is located in Aktobe Oblast in Western
Kazakhstan, and includes the producing and developing areas of the
East Zhagabulak field and the exploration areas of Baktygaryn,
Itassai, Kodzhasy and West Kodzhasy fields. In 2012, Aral produced
approximately 11,385 tons of oil equivalent (“TOE”) (approximately
86,910 barrels of oil equivalent (“BOE”)) from 5 wells, and the
asset is currently producing an average of approximately 383 BOE
per day from 3 wells, as it works to rework and retest other wells
on the asset. Aral is currently testing 2 wells on the asset, and
plans to complete testing on a total of 4 wells in 2013. Aral also
plans to conduct 2D and 3D geographical operations and engineering
designs over an additional 123,553 acres on the asset. To date,
Aral has spent approximately $134 million on exploration and
development of the asset.
Under the agreement, the Company plans to effectively take
control of Aral through acquisition of a 51% controlling interest
in Asia Sixth by way of subscription of shares of Asia Sixth, which
in turn currently holds a 60% controlling interest in Aral. Asia
Sixth’s interest in Aral is scheduled to increase to 66.5%
following the completion of certain transactions to occur between
Asia Sixth and Asia Sixth’s partner in Aral that currently holds
the remaining 40% interest in Aral (the “Aral Transactions”). Upon
closing and completion of the Aral Transactions, Aral will be owned
66.5% by Asia Sixth, which will be controlled and managed by the
Company. Thus, the Company, through its 51% majority ownership in
Asia Sixth, will own an approximately 34% interest in Aral and have
control of Aral through its control of Asia Sixth.
The Company has paid an initial deposit of $8 million to Asia
Sixth, and shall increase its initial deposit by up to $12 million
to a total of $20 million contingent upon receipt of payment in
full to the Company from certain investors under promissory notes
maturing in September 2013 and December 2013. The deposit is
subject to full refund to the Company in the event the transaction
does not close, other than as a result of the Company’s material
uncured breach. This money will also be used, in part, to
recomplete and rework currently producing wells with the hope of
significantly increasing their production rates. Based on how these
wells perform, at closing, the Company shall owe to Asia Sixth a
final closing payment equal to an additional: (i) $20 million if
the daily average volume of oil produced by Aral over a specified
30 day period (the “Target Volume”) equals or exceeds 1,500 barrels
of oil per day (“BOPD”); (ii) $15 million if the Target Volume
equals or exceeds 1,000 BOPD but is less than 1,500 BOPD; or (iii)
$0 due if the Target Volume comes in less than 1,000 BOPD.
The closing of the transaction is anticipated to occur in
September 2014, subject to the satisfaction of certain customary
closing conditions including the approval of the Agency of the
Republic of Kazakhstan for the Protection of Competition and the
Ministry of Oil and Gas of the Republic of Kazakhstan (“MOG”), and
the MOG’s waiver of its pre-emptive purchase right with respect to
the transaction.
The Company’s ability to pay the final closing payment (if and
to the extent due) is contingent upon the Company securing
sufficient financing, of which there can be no assurances.
Commenting on the pending acquisition, President and CEO Frank
Ingriselli noted, “We are very excited about the potential
acquisition of this Kazakhstan oil and gas development, production
and exploration interest. This opportunity represents our first
major international acquisition that we anticipate will allow us to
participate in a long standing global oil play. Not only is the
large contract area of 380,000 acres within the largest producing
basin in Kazakhstan, it is also in close proximity to some of the
most prolific oil producing properties in the Republic of
Kazakhstan, including the two largest oilfields owned by Chevron
Corporation. We look forward to the closing of this transaction,
and the continued production from, and further development of, this
asset.”
About Pacific Energy Development (PEDEVCO Corp.)
PEDEVCO Corp, d/b/a Pacific Energy Development (NYSE MKT:PED),
is a publicly-traded energy company engaged in the acquisition and
development of strategic, high growth energy projects, including
shale oil and gas assets, in the United States and Asia. The
Company’s principle assets include its Niobrara asset located in
the DJ Basin in Colorado, its Mississippian asset located in
Comanche, Harper, Barber and Kiowa Counties, Kansas, its Eagle Ford
asset in McMullen County, Texas, and its North Sugar Valley asset
located in Matagorda County, Texas. Pacific Energy Development is
headquartered in Danville, California, with offices in Houston,
Texas and Beijing, China.
Forward-Looking Statements
All statements in this press release that are not based on
historical fact are “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995 and the
provisions of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements include, without limitation,
the timing of the commencement of trading on the NYSE MKT. While
management has based any forward-looking statements contained
herein on its current expectations, the information on which such
expectations were based may change. These forward-looking
statements rely on a number of assumptions concerning future events
and are subject to a number of risks, uncertainties, and other
factors, many of which are outside of the Company’s control, that
could cause actual results to materially differ from such
statements. Such risks, uncertainties, and other factors include,
but are not necessarily limited to, those set forth under Item 1A
“Risk Factors” in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2012. The Company operates in a highly
competitive and rapidly changing environment, thus new or
unforeseen risks may arise. Accordingly, investors should not place
any reliance on forward-looking statements as a prediction of
actual results. The Company disclaims any intention to, and
undertakes no obligation to, update or revise any forward-looking
statements. Readers are also urged to carefully review and consider
the other various disclosures in the Company’s public filings with
the SEC.
Pacific Energy DevelopmentBonnie Tang, 1-855-733-3826 ext 21
(Media)PR@pacificenergydevelopment.comorInvestor Relations:Liviakis
Financial Communications, Inc.John Liviakis,
+1-415-389-4670john@liviakis.comorCCG Investor Relations
Inc.Crocker Coulson, +1-646-213-1915 (New
York)Presidentcrocker.coulson@ccgir.comwww.ccgir.com
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