Settlement of Loan Note

RNS Number : 0112L

Independent Resources PLC

28 September 2016

 

Independent Resources plc

 ("IRG" or the "Company")

Settlement of Loan Note

Independent  Resources plc (AIM:IRG) is pleased to announce that its Joint Venture with Nostra Terra (AIM:NTOG), Independent Resources (Egypt) Ltd ("IRE"), has reached an agreement ("Agreement") with TransGlobe Petroleum International Inc. ("TransGlobe") concerning the early repayment of the US$2.5 million loan note ("Loan Note") issued to TransGlobe in October 2015 and repayable on 30 September 2017. Under the terms of the Agreement, IRE will pay US$200,000 to TransGlobe in full and final settlement of the Loan Note.

IRE's 50% interest in the East Ghazalat concession (the "Concession") is not affected by this Agreement. IRG will pay US$100,000 for its proportional share of the Agreement. This removes the outstanding liability net to IRG of approximately US$1.3 million (including accrued interest), leaving no further debt on the asset or payments owed to TransGlobe.

Background

As previously announced, IRE is IRG's co-owned Joint Venture with Nostra Terra. IRE owns a 100% interest in Sahara Resources (GOS) Inc, which owns a 50% non-operating interest in the Concession, located in the Western Desert region of Egypt approximately 240 kilometres southwest of Cairo. The Concession is operated by North Petroleum, a subsidiary of the Chinese state-owned ZhenHua Oil Co. Ltd. IRE acquired its stake in the Concession from TransGlobe on 15 October 2015 for a headline consideration of US$3.5 million, satisfied by the payment of US$1 million in cash and the issue of the $2.5 million loan note to TransGlobe. The implied acquisition cost has now been improved to US$1.19 per barrel (previously US$3.47 per barrel) of 2P oil reserves attributable to the acquired interest.

Gross 2P reserves attributable to IRE's interest in the Concession were estimated at 1,008,922 barrels of oil on 30 June 2015 (DeGolyer and MacNaughton Canada Limited estimate). In addition there are two natural gas discoveries on the Concession.

Early Settlement of the Loan Note

After recent negotiations, TransGlobe has agreed to accept the US$200,000 payment from IRE as full and final settlement of the Loan Note with no further adjustments of the type set out in the Company's announcement of 6 October 2015. IRE has agreed to release TransGlobe from any potential warranty and indemnity claims, which it may have had under the original sale and purchase agreement, and indemnifies TransGlobe in respect of any claims, which may arise from TransGlobe's prior ownership of East Ghazalat.

In return TransGlobe has agreed to forgo the outstanding $2.3 million balance on the Loan Note and any claims for accrued interest since completion of the acquisition in October 2015.

The Agreement represents final completion of IRE's acquisition of its 50% stake in the Concession.

Greg Coleman, Chief Executive Officer of IRG, commented:

"We are pleased to have reached a mutually acceptable settlement with TransGlobe which reflects the mature approach adopted by all parties to these discussions. This is an important step in reducing our obligations in the current lower for longer oil price environment. We can focus even more on addressing the operational issues with our asset.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For further information, visit www.ir-plc.com or contact:

Greg Coleman	Independent Resources plc	020 3367 1134
Adam James	Panmure Gordon (UK) Limited	020 7886 2500
	(Nominated Adviser & Joint Broker)
Oliver Stansfield	Brandon Hill Capital	020 3463 5000
Jonathan Evans	(Joint Broker)
Simon Hudson	Tavistock Communications	020 7920 3150

 

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