Petrel Resources Falls 7% on Interim Statement

Arman Kayablian, COO of Amira Industries N.V., has joined the board of Petrel as a non-executive director. Arman has over 10 years' experience in project finance and development operations in the energy, utilities and telecommunications industries.

The acquisition is in line with Petrel's strategy of reinforcing its interests in Iraq. The shareholding in Amira's assets expands Petrel's programme scheduled for the next 18 months, with the potential to drill one or two additional wells.

The investment in Amira is essentially a US$500,000 option price. The initial consideration comprised an up-front cash payment of US$500,000 and the issue of locked in 18,947,368 shares in Petrel.

A further 10,526,316 shares in Petrel will be issued when the first conventional oil well spuds. When a well is spudded these initial shares become tradeable. A second tranche of 10,526,316 shares will be issued when there is a commercial discovery. If no drilling takes place within 5 years the deal expires and all share agreements cease.

Petrel is also given a right of first refusal to participate or acquire an operated interest in any future exploration and production licences that Amira Industries secures in the Iraqi provinces of Muthanna, Karbala, Babil and Najaf. The terms of Petrel's participation in such licences are likely to be similar to Amira Industries' arrangement with Oryx Petroleum in respect of the Wasit licences.

Wasit Overview

Wasit is a large, relatively underexplored province in east central Iraq close to the giant East Baghdad field. Amira holds a 25 per cent carried interest in three contracts with the Wasit Provincial Government to explore and develop hydrocarbons in the Wasit province: an Asphalt Exploration Contract, Seismic Option Agreement and Risk Exploration Contract. The Wasit Government has a back-in right in respect of the licences which, if exercised in full, will reduce Amira's interest to 20 per cent (equivalent to a 4 per cent carried interest for Petrel).

The operator of the Wasit Licence is Oryx, a Canadian E&P independent listed on the TSX with a market capitalisation of US$1.4 billion. To date, Oryx has identified five principal leads in the province containing 1,010 million barrels of unrisked prospective oil resources. Amira's interest in the Wasit Licence is carried to production by Oryx.

Oryx plans to commence a seismic data acquisition program in 2013 and to drill an exploration well in the first half of 2014.

The full company statement can be viewed here.

(Sources: Petrel, Yahoo!)

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