TUSKAR Resources is to be effectively taken over as a result of a deal by the company to buy a 40 per cent stake in an offshore Nigeria oil mining lease from Allied Energy, part of the Camac/Allied group.
Allied is to receive 617.8 million new Tuskar Resources shares, at a deemed price of 1.25p each. This would give Allied 65 per cent of the enlarged equity. Allied will also receive warrants to subscribe for a further 50 million Tuskar shares at an exercise price of 3p at any time up to December 31st, 2000.
The deal will have to be approved by Tuskar shareholders at an extraordinary general meeting on October 11th, immediately after the annual general meeting. The Tuskar shares have been suspended pending shareholder approval of the transaction.
Camac/Allied is a diversified group engaging in energy exploration and development and its staff of technical specialists are located in Lagos, Nigeria, and Houston in the US. It is also engaged in engineering and consultancy and has investments in the food and drink industries and the environmental sector.
Tuskar said the lease offshore Nigeria - known as the "OML 110" - contains the Obe Field and a number of other identified potential oil bearing structures, and adjoins other blocks on which commercial oil discoveries have been made. Obe 1 well, which tested 3,500 barrels of oil per day, was suspended as an oil discovery. The Obe 2 well was abandoned as a non commercial oil discovery. The Obe 3 well drilled in 1994 was suspended as an oil discovery having tested 1,850 barrels of oil per day. These, said Tuskar, provided the impetus for the development of the Obe Field.
Tuskar noted that OML 110 adjoins other blocks on which commercial oil discoveries have been made. These are listed as the Chevron operated block 95 on which the Parabe, Malu, Meren, Isan and West Isan oil fields are located; the Express/Conoco operated block 74 on which the Ukpokiti oil field is currently under development; and block 210 in the deeper water where a consortium comprising BP, Statoil and Camac/Allied has recently announced the Oye oil discovery.
A spokesman for Tuskar noted that Tuskar has a minimum amount of assets and the deal will give it a "kick start" bringing it into new exciting areas. Tuskar described the deal as a "strategic alliance" with the Camac/Alliance group, initially through the 40 per cent stake in the licence with the potential for early cash flows from the development of the Obe field.
Also, because of the block's location, Tuskar believes that the potential exists for the discovery of commercial oil and gas reserves, particularly in the deeper water southern sector.
Under the terms of the acquisition agreement, Tuskar will assume the obligation of Allied in respect to OML 110. The working capital requirement for the next two years, together with day to day running costs of the enlarged group, is estimated at £4.4 million. Tuskar has cash resources of just $2.6 million (£1.61 million) but Camac/Allied has undertaken to advance Tuskar up to $6 million, including interest.
Under other agreements with Camac/Allied, Tuskar will be offered first refusal to participate in other exploration projects in a number of West African countries. And Camac/Allied will provide Tuskar with management and technical advice on OML 110.
Two Camac/Allied directors, Mr Kase Lawal and Mr Howard Wolf, are to join the Tuskar board. Mr Wolf will take over the chairmanship from Mr Duncan McGregor, within six months of completion of the agreement. Mr Emmet Brown will become managing director of Tuskar.
