TORONTO, ONTARIO -- (Marketwire) -- 02/05/13 -- Eurogas International Inc. ("Eurogas International" or the "Corporation") (CNSX: EI) today announced its financial results for the year ended December 31, 2012. The Corporation's annual audited financial statements, along with the accompanying management's discussion and analysis have been filed on the System for Electronic Document Analysis and Retrieval ("SEDAR") and may be viewed by interested parties under the Corporation's profile at www.sedar.com or the Corporation's website at www.eurogasinternational.com.
In November 2012, the Corporation announced that, together with its joint venture partner, Atlas Petroleum Exploration Worldwide Ltd., it had received approval from the Tunisian regulatory authorities for a renewal of the Sfax offshore exploration permit (the "Sfax Permit") from December 9, 2012 to December 8, 2015 (the "First Renewal Period"). As part of the granting of the First Renewal Period, the joint venture partners were required to relinquish 807 square kilometres of land in the southwestern region of the Gulf of Gabes. The Sfax Permit now encompasses approximately 800,000 acres, located within a prolific hydrocarbon fairway extending from offshore Libya, through the Gulf of Gabes, to onshore Tunisia. It is surrounded by producing oil and natural gas fields to the west, north and east, including the Ashtart oil field that lies along the southeast boundary.
The terms of the First Renewal Period include an obligation for the joint venture partners to drill an exploration well (the "First Renewal Well Obligation") of sufficient depth to enable an appropriate assessment of potential reserves. The First Renewal Well Obligation is in addition to the obligation of the joint venture partners to drill an exploration well under the initial terms of the Sfax Permit (the "Initial Well Obligation"). With the concurrence of the Tunisian authorities, and as a condition to the approval of the First Renewal Period, the Initial Well Obligation has been transferred to the First Renewal Period. The Initial Well Obligation must be drilled to sufficient depth to reach the Bireno limestones of the Cretaceous age.
The actual cost of drilling these two wells will depend on the selection of the prospect and location within the Sfax Permit. Based on current information, the Corporation estimates that its share of the cost to meet the Initial Well Obligation ranges from between US$6 million and US$9 million. The Corporation has not yet completed its assessment of the costs associated with the First Renewal Well Obligation.
In the event that the Corporation's drilling commitments are not completed prior to the expiry of the First Renewal Period, a compensatory payment of up to US$8 million per well will be payable to the Tunisian government by the joint venture partners, less any amounts incurred by the joint venture partners in respect of the completion of these obligations.
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