(1) Ryder Scott resource report effective June 8, 2012, which has been adjusted to reflect the results of the Guvernir well drilled on the Antep license in 2012
(2) Estimates provided by management of Anatolia and Cub
Strategic Rationale
The Transaction represents a continuation of Cub's vision to build a diversified geographically-focused exploration and production asset portfolio through sustainable organic growth and accretive transactions. Turkey is a natural extension into a neighboring country with a history of oil and gas production and the necessary infrastructure in place to support ongoing exploration and development activities. Cub takes a very proactive approach in assessing all regional opportunities for the quality of asset base, geological similarities, the political/economic landscape and the ability to compliment an already strong portfolio in terms of measured risked upside.
Anatolia's Strategic Rationale for the Transaction
The board of directors of Anatolia believes that the Transaction provides a number of benefits to its shareholders, including:
-- Value equal to or greater than the value that might have been realized from the execution of Anatolia's business plan given the challenges, risks, capital and dilution that would be required to implement the current plan.-- Access to Cub's portfolio of producing assets in Ukraine. Over 1,550 boe/d of current production with potential exit target rate of over 2,000 boe/d by the end of 2013(3).-- Exposure to conventional natural gas targets in an attractive fiscal regime with attractive well economics.-- Access to over 244,000 gross (180,000 net) acres across the major producing, Pannonian Sedimentary Basin and the Dnieper-Donets Sedimentary Basin in Ukraine.-- Exposure to a diversified asset base and resulting balanced portfolio of developmental and high impact exploration prospects in Ukraine with multiple play types.
(3) Estimates provided by management of Cub
Cub's Strategic Rationale for the Transaction
The board of directors of Cub believes that the transaction provides a number of benefits to its shareholders, including:
-- Exposure to Turkey's Silurian Dadas Shale resource oil play, which has been progressed by Anatolia. The Dadas Shale is a proven source rock throughout the Middle East and North Africa.-- Access to a diversified asset base and resulting balanced portfolio of developmental and high impact exploration prospects in Turkey and Ukraine with multiple play types.-- Leverage to 581,429 net acres of Anatolia's undeveloped land base that has only had a relatively small percentage fully evaluated to date.-- Exposure to Turkey's attractive oil and gas fiscal terms (e.g. 12.5% flat royalty, 20% corporate tax and Brent crude pricing) and growing economy which requires approximately 90% of its energy demand to be imported.
Mikhail Afendikov, Chief Executive of Cub, commented:
"This is an exciting and important development for Cub as we continue to expand and diversify our operations within the Black Sea region. We are very excited at the prospect of acquiring Anatolia. We believe the benefits of the combined entity provide existing Cub shareholders exposure to a strategic partnership with a suite of assets in Turkey. We believe that the Anatolia team have progressed the Dadas Shale resource oil play and we are thrilled to be able to participate in the further development and de-risking of this project.
