Predator Oil & Gas Holdings (POGT) served written notice on 14 July 2020 of its intent to  exercise its option to make an offer to enter into a Share Purchase Agreement to acquire the entire outstanding issued share capital of FRAM assuming zero net debt at the time of Completion, and Subject to Contract, technical, legal and commercial due diligence.

Conditions Precedent, Cash Consideration and Terms and Conditions were commercially sensitive at the time but can now be summarised below

Conditions Precedent

1. The receipt of written consent prior to Completion from the Ministry of Energy and Energy Industries ("MEEI") and Heritage Petroleum Company for the proposed Change of Control of FRAM.
2. The receipt prior to Completion from FRAM of a mutually agreed Working Capital Statement.
3. Columbus Energy Resources, FRAM's parent company, to provide a written, legally binding, warranty to POGT prior to Completion that there are no outstanding claims against Columbus of whatsoever nature as a consequence of which a lien on the assets of FRAM might arise.

Cash Consideration

The Offer comprised a cash consideration of one million seven hundred and fifty thousand United States Dollars (US$ 1,750,000) exclusive of VAT, where applicable.

Terms and Conditions

1. The Offer was valid for five (5) business days from 14 July 2020, expiring at 5pm UK GMT on Tuesday 21 July 2020
2. The Offer was conditional on, among other matters, a Working Capital Adjustment to be mutually agreed at Completion

Offer Deadline Expired

The validity of the Offer expired at 5pm UK GMT on Tuesday 21 July 2020.

Columbus are currently in a proposed merger that under the Scheme Document prevents the disposal of any material asset.

Accordingly Predator will progress discussions further with Columbus when facilitated by conclusion of the Columbus proposed merger and before the expiry of the period under the WPA relating to Predator's rights upon a change of control of FRAM, insofar as it may or may not impact Predator's forward planning for expansion of CO2 EOR activities in the Inniss-Trinity field.

Predator is recommending to carry out an oil rate test for well AT-5X within the next two weeks to assess the impact of significant CO2 injection to date on the potential for oil to flow from the injected reservoirs in Inniss-Trinity at enhanced rates and to assess changes in the properties of the oil with which to re-calibrate the CO2 injection parameters if required. Effectiveness and retention of CO2 sequestration capacity can also be assessed.

Financing

The cash consideration for an acquisition of FRAM would be financed by a local Trinidadian company in return for it being assigned operatorship and certain rights as defined in the Incremental Production Services Contract for  the Inniss-Trinity field , subject to consent from the MEEI and Heritage for any  proposed Change of Control of FRAM. POGT would  retain the tax losses in FRAM and the profits from its Pilot Enhanced Oil Recovery in the AT-4 Block using injected Carbon Dioxide ("Pilot CO2 EOR"),  on terms similar to those defined in the current WPA, except that in addition, on Completion of  an  Offer to acquire FRAM, POGT shall be entitled to  the profits from all future CO2 EOR operations anywhere within the confines of the Inniss-Trinity field on the same commercial terms as currently exist for the AT-4 Block.

New opportunities

Separate to an Offer to acquire FRAM, POGT and the local Trinidadian company have agreed to look at evaluating together two new CO2 EOR opportunities in existing fields onshore Trinidad together with a potential collaboration onshore Guyana, whereby Predator can provide its technology, experience and skills  to, at Predator's sole discretion, have the option to participate in any new joint venture arising from our joint evaluation of the opportunities.

Morocco

Predator notes that ConocoPhillips Morocco Ventures Ltd., whose parent company is ConocoPhillips Company, one of the world's largest independent exploration and production companies ,  was awarded on 12 June 2020 the Mesorif Reconnaissance Contract adjoining to the west the Predator Oil & Gas Ventures Ltd. Guercif licence.

Paul Griffiths, Chief Executive of Predator, commented:
"We are looking to begin to execute our M & A strategy by building on the businesses we have initiated and developed in three separate jurisdictions. New opportunities in Trinidad and potentially Guyana, combined with our exclusivity over Trinidad's surplus liquid CO2 supply and our successful implementation of CO2 sequestration, creates the catalyst for value-enhancing M & A transactions. However, these will not be executed at unrealistic prices as management believes that specific assets can be enhanced in value only through the application of its particular skill sets and proven track record in the countries where it operates.

Naturally, we welcome ConocoPhillips as our new next-door neighbour as we progress to drilling material gas prospects adjacent to the Maghreb gas pipeline. It is reassuring to know that the potential for gas in this specific part of Morocco has now also been recognised by a multi-national E & P company, validating our decision last year to move quickly to secure the Guercif opportunity for early drilling. Previously unrecognised, material gas potential has recently been identified in the area selected for drilling, which is an addition to the 320 BCF of gas resources attributed to our net interest. Further information will be included in an updated corporate presentation to be made available on our website in the next week or two." 

Background - Trinity Inniss CO2 Project

As previously announced, the term of the Inniss-Trinity Incremental Production Service Contract ("IPSC") has been extended to allow for the implementation of Pilot CO2 EOR.

The first tranche of CO2 has now been injected into well AT5X in the Inniss-Trinity field and will over time contribute to the determination of any impact on enhancement of  production in offset wells to AT5X. Predator and Columbus, its joint venture partner, will inject further tranches of CO2 as is required to fully evaluate the potential of CO2 injection to increase oil production from the offsetting wells in the AT-4 Block, which is the site of the initial Pilot CO2 EOR.

Predator benefits from a Well Participation Agreement with FRAM Exploration Trinidad Ltd ("FRAM"), a wholly owned subsidiary of Columbus, whereby Predator will help plan and fund the Pilot CO2 EOR in return for 100% recovery of its project costs from Pilot CO2 EOR profits from oil sales, and thereafter 50% of all profits attributable to the Pilot CO2 EOR.  As part of the agreement with FRAM, Predator has the right (until 30 September 2020) to acquire FRAM's 100% interest (the "Interest") in the Inniss-Trinity field Incremental Production Services Contract. 

KeyFacts Energy: Predator Oil & Gas Trinidad and Tobago country profile