The directors and management of Strata-X Energy Ltd. has announced that the company has pre-empted a third party offer to buy out Magnum Power and Gas’ (MPE) 25% interest in the 273,000 acre, 1.4Tcf Prospective Resource, Serowe Coal Seam Gas Project.
Strata-X elected to pre-empt the offer as its gives the company flexibility in developing the resources outside of a restrictive farmin agreement and grants the company greater optionality to use the value in the Serowe CSG tenement in lieu of shareholder dilution.
The Serowe CSG project is located in the Kalahari Basin CSG fairway, and offsets tenements of ASX peer TLOU. Strata-X currently holds the tenements through its Republic of Botswana subsidiary, Rhino CBM PTY LTD.
The Company expects the final pre-empt agreements will to be executed by the end of the first quarter 2018. During this time, the Company will initiate environmental surveys and complete an Environmental Management Plan (“EMP”) for its 2018-2019 drilling and testing programme. Upon concluding the EMP, the Company will move forward with an active drilling and testing programme.
To offset pre-empt costs to buyout MPE, Strata-X is actively engaged in farmout discussions with third parties to sell a non-operated position in the tenements which should defray the cost of pre-empting and a portion of the 2018 exploration programme. Any arrangements that the Company enters will preserve its rights to develop the resource as operator, granting Strata-X the ability to control timing and development methods.
“We are excited to have full control of our Botswana asset and can now dictate its development at a pace that maximises our capital. Strata-X plans to use the latest, ultra-low cost innovative technologies and methods to develop and convert this gas resource to reserves,” Ron Prefontaine, Chairman of the Board said.
“The CSG play in the Kalahari Basin has similar attributes to the CSG plays in Queensland where reserves have grown from insignificant to several tens of TCF over the past 15 years. By converting the significant gas resources in these tenements to reserves, and given the huge and diverse gas markets in Botswana and surrounding southern Africa countries, in my view, SXA has the potential to repeat the exponential growth of the early small cap Queensland CSG explorers.”
The pre-empt offer made by Strata-X will be subject to similar terms and conditions as that made by the third party seeking MPE’s 25% interest in Rhino CBM PTY LTD. The agreement will call for an immediate deposit of AUD$25,000 to MPE along with execution of the formal Purchase and Sale Agreement (“PSA”) by the end of February 2018.
Upon execution of a PSA and Strata-X’s satisfaction of several closing conditions, Strata-X will pay MPE AUD$125,000 in cash and grant a 3.5% overriding royalty interest in the tenements net to MPE’s 25% bought out ownership. Thereafter, Strata-X will deliver to MPE, AUD$200,000 within 60 days of closing the PSA along with another AUD$200,000 within 135 days of closing the PSA. The PSA, which has yet to be drafted, will include customary warranties, covenants, terms, and conditions. (Source: globenewswire.com)