CALGARY, Canada, February 29 /PRNewswire/ --
- Amendments to the Production Sharing Contract for the Taq Taq License Area
Addax Petroleum Corporation ("Addax Petroleum" or the "Corporation") (TSX:AXC and LSE:AXC) today confirms that it has signed an agreement with the Kurdistan Regional Government ("KRG") amending the production sharing contract it holds together with Genel Enerji in respect of the Taq Taq license area in the Kurdistan Region of Iraq (the "Taq Taq PSC"). The Taq Taq license area includes the Taq Taq field and the Kewa Chirmila prospect. The purpose of the amendments is to bring the Taq Taq PSC into conformity with the Oil and Gas Law of the Kurdistan Region - Iraq (the "Oil and Gas Law") and Model PSC, including the royalty, cost recovery and profit share components.
Commenting today, Addax Petroleum's President and Chief Executive Officer, Jean Claude Gandur, said: "We are pleased to be working closely and in a spirit of cooperation with our partners at the KRG to arrive at a result that is beneficial to all parties. The new terms of our Taq Taq PSC are now in line with the recently enacted legislation and our stakeholders will be pleased to know that our economic and operational interest is materially unchanged. The results from our appraisal campaign at Taq Taq to date have been extremely positive and we are encouraged by the exploration potential we are uncovering through seismic surveys. We look forward to continued strong relations with the KRG as we seek to implement a full field development program with the potential of first oil as early as next year."
The review and renegotiations were conducted between the KRG, Genel Enerji and Addax Petroleum in accordance with Article 54 of the Oil and Gas Law which required review of the Taq Taq PSC by the Regional Council for the Oil and Gas Affairs of the Kurdistan Region - Iraq (the "Regional Council"), taking into consideration the prevailing conditions when the Taq Taq PSC was originally entered into.
The most significant changes to the terms of the Taq Taq PSC include i) the combination of previously separate terms for the Taq Taq and Kewa Chirmila areas, including the synchronization of the government back-in rights at up to 20 per cent, ii) a reduction in the maximum Cost Oil recoverable in a given year, which is partially offset by an effective increase through an interim period that accelerates the recovery of the initial capital investment by the Contractor, and iii) the introduction of a "R factor" in the Profit Oil calculation, which adjusts the financial returns to the Contractor and Government based on relative level of cumulative capital spending and cumulative revenue. The ultimate financial impact of the amendments to the terms of the Taq Taq PSC is dependent on operational outcomes, including reserve, production and cost levels. However, the Corporation believes that under most of the likely scenarios and considering the further exploration potential of the PSC area, the amendments do not result in a material change to the financial or operational interests of Addax Petroleum.
About Addax Petroleum
Addax Petroleum is an international oil and gas exploration and production company with a strategic focus on West Africa and the Middle East. Addax Petroleum is one of the largest independent oil producers in West Africa and has increased its crude oil production from an average of 8,800 bbl/d for 1998 to an average of approximately 126,000 bbl/d for 2007. Further information about Addax Petroleum is available at http://www.addaxpetroleum.com or at http://www.sedar.com.
Legal Notice - Forward-Looking Statements
Certain statements in this press release constitute forward-looking statements under applicable securities legislation. Such statements are generally identifiable by the terminology used, such as "anticipate", "believe", "intend", "expect", "plan", "estimate", "budget", "outlook", "may", "will", "should", "could" , "would" or other similar wording. Forward-looking information includes, but is not limited to, reference to business strategy and goals, future capital and other expenditures, reserves and resources estimates, drilling plans, construction and repair activities, the submission of development plans, seismic activity, production levels and the sources of growth thereof, project development schedules and results, results of exploration activities and dates by which certain areas may be developed or may come on-stream, royalties payable, financing and capital activities, contingent liabilities, environmental matters, and government approvals. By its very nature, such forward-looking information requires Addax Petroleum to make assumptions that may not materialize or that may not be accurate. This forward-looking information is subject to known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such information. Such factors include, but are not limited to: imprecision of reserves and resources estimates; ultimate recovery of reserves; prices of oil and natural gas; general economic, market and business conditions; industry capacity; competitive action by other companies; fluctuations in oil prices; refining and marketing margins; the ability to produce and transport crude oil and natural gas to markets; the ability to market and sell natural gas under its production sharing contracts; the effects of weather and climate conditions; the results of exploration and development drilling and related activities; fluctuations in interest rates and foreign currency exchange rates; the ability of suppliers to meet commitments; actions by governmental authorities, including increases in taxes; decisions or approvals of administrative tribunals; changes in environmental and other regulations; risks attendant with oil and gas operations, both domestic and international; international political events; expected rates of return; and other factors, many of which are beyond the control of Addax Petroleum. More specifically, production may be affected by such factors as exploration success, start-up timing and success, facility reliability, reservoir performance and natural decline rates, water handling, and drilling progress. Capital expenditures may be affected by cost pressures associated with new capital projects, including labour and material supply, project management, drilling rig rates and availability, and seismic costs. These factors are discussed in greater detail in filings made by Addax Petroleum with the Canadian provincial securities commissions.
Readers are cautioned that the foregoing list of important factors affecting forward-looking information is not exhaustive. Furthermore, the forward-looking information contained in this press release is made as of the date of this press release and, except as required by applicable law, Addax Petroleum does not undertake any obligation to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise. The forward-looking information contained in this press release is expressly qualified by this cautionary statement.
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