Santos to Steer Eastern Star Gas

- Santos to Steer Eastern Star Gas

Wednesday, July 20, 2011
Santos Ltd.

Santos has reached binding agreements to give effect to:

• the acquisition of 100% of the outstanding ordinary shares in Eastern Star Gas Limited (ESG); and
• the subsequent sale of a 20% working level interest in ESG's permits in the Gunnedah Basin, northern New South Wales, for A$284 million to TRUenergy Holdings Pty Ltd (TRUenergy).

Pursuant to these transactions, Santos will assume operatorship and own 80% of ESG's coal seam gas (CSG) permits with TRUenergy owning the remaining 20%.

The acquisition of ESG will be conducted via a recommended Scheme of Arrangement (Scheme) under which ESG shareholders will receive 0.06803 Santos shares for every ESG share held.

Based on Santos' closing price of A$13.23 on July 15, the transaction values ESG at A$0.90 per ESG share or A$924 million, and represents a 3P reserves multiple of A$0.50 per gigajoule.

The acquisition of ESG builds on Santos' existing interests in the Gunnedah Basin. Following completion, Santos will have the largest natural gas reserves position in NSW, with 1,216 PJ of 2P reserves and 2,238 PJ of 3P reserves.

TRUenergy, a leading energy retailer with significant power generation interests in Eastern Australia, represents an ideal partner to develop ESG's permits in joint venture with Santos.

Santos is one of Australia's largest domestic natural gas producers and has a long track record of working with local communities to safely and sustainably produce natural gas.

Santos Chief Executive, David Knox, said, "This transaction represents the next major step in Santos' eastern Australia gas strategy and positions the company to meet the expected increase in demand for natural gas from both domestic power generation and export LNG markets."

"The acquisition of ESG is a unique opportunity to consolidate our Gunnedah Basin interests and establish the leading position in Australia's next major natural gas province."

"Santos has been working in regional Australia for more than 50 years, including 15 years exploring for and developing coal seam gas."

"Santos is committed to developing the coal seam gas industry in the Gunnedah Basin without impacting the important role the region plays as an agricultural producer. The growth of the natural gas industry in the Gunnedah Basin will bring new jobs and additional investment to local communities across the region," Mr. Knox said.

Proposed Acquisition of ESG

Santos and ESG have entered into a Scheme Implementation Deed (SID) under which it is proposed that Santos will acquire all of the issued and outstanding ordinary shares of ESG, other than the shares already held by Santos and TRUenergy.

Santos currently owns approximately 20.9% of the issued and outstanding ordinary shares of ESG and TRUenergy owns approximately 3.8%.

Proposed Joint Venture arrangements with TRUenergy

Santos has entered into a series of binding arrangements with TRUenergy, which give effect to:

• the sale by TRUenergy of its 39 million shares in ESG to Santos at A$0.90 per share resulting in proceeds of approximately A$35 million; and
• the acquisition by TRUenergy of a 20% interest in ESG's CSG permits and a pro rata share of other assets previously owned by ESG for approximately A$284 million

resulting in net cash consideration to Santos of approximately A$249 million. The sale will take effect on the second business day following completion of the Scheme.

The cash proceeds from TRUenergy fully cover Santos' anticipated incremental capital expenditure to fund its share of the ongoing development of the Gunnedah Basin to the end of 2014.

The agreements with TRUenergy are conditional on the successful completion of the Scheme and regulatory approvals.

Mr. Knox said, "Santos welcomes TRUenergy, one of Australia's largest integrated energy companies, as our joint venture partner in developing this major natural gas province."

TRUenergy's Managing Director, Richard McIndoe, said, "We are pleased to become joint venture partners in the Gunnedah Basin with Santos. With such a qualified partner developing and operating the field, TRUenergy can focus on its core strengths of power generation and retailing with confidence that our equity gas will be available when we need it in the future."

Santos' position in the Gunnedah Basin

Santos first acquired interests in the Gunnedah Basin in 2007, and in 2009 acquired a 20% holding in ESG and a 35% equity interest in various exploration permits operated by ESG.

In addition to the permits held by ESG, Santos' other Gunnedah Basin assets (for which it is already operator) include:

• 25% of PELs 1 and 12 (Santos can increase its interest to 65% via farm-in);
• 15% of PEL 456 (Santos can increase its interest to 50% via farm-in); and
• 100% of PELs 450, 452 and 462.

Assumption of operatorship and majority interest in the various CSG permits will allow Santos to undertake coordinated development of its Gunnedah Basin acreage.

Santos Vice President Eastern Australia James Baulderstone said, "Santos will develop our coal seam gas business working in cooperation with farmers and existing rural businesses in the region, continuing our 50-year track record of building beneficial partnerships with landowners and local communities."

"We are aware of a number of important issues raised by local farmers and other land users concerning the longer term development of the Gunnedah Basin, one of which is the proposed Narrabri to Wellington pipeline. We are confident we can address community concerns in that regard and we will be explaining these plans to the community in the near future, once we have completed our review of Eastern Star's plans."

"We also look forward to ESG staff joining Santos and the important role they will play in developing our assets in NSW," Mr. Baulderstone said.

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Denbury to Take Remaining Stake, Steer Riley Ridge Project

- Denbury to Take Remaining Stake, Steer Riley Ridge Project

Tuesday, June 28, 2011
Denbury Resources Inc.

Denbury has entered into an agreement to acquire the 57.5% working interest it does not already own in the Riley Ridge Federal Unit located in southwestern Wyoming, and an approximate 33% working interest in an additional +/-28,000 acres of mineral leases adjoining the Riley Ridge Unit. The total purchase price is estimated at $191 million assuming full payout of purchase price contingencies, plus capital incurred between April 1, 2011, the effective date of the purchase, and closing. The acquisition is expected to close in late July and is subject to satisfactory completion of customary due diligence review.

Transaction Highlights

• The acquisition includes a 57.5% working interest in the 9,700+ acre Riley Ridge Federal Unit and an approximate 33% working interest in an additional +/- 28,000 acres of mineral leases adjoining the Riley Ridge Unit. Denbury will become the operator of both projects. The Company currently estimates that the Riley Ridge Federal Unit contains proved reserves of 250 billion cubic feet (Bcf) of natural gas, 8.9 Bcf of helium (He) and approximately 1.4 trillion cubic feet (Tcf) of carbon dioxide (CO2), net to the interest to be acquired. The additional +/- 28,000 acres is estimated to contain additional probable reserves of 250 to 300 Bcf of natural gas, 9.5 to 11.5 Bcf of helium and 1.0 to 1.2 Tcf of CO2, net to the interest to be acquired.
• Total proved plus probable CO2 reserves in the Riley Ridge Unit and adjoining acreage in which the Company has an interest is estimated at approximately 6.1 Tcf (100% working interest), of which the Company's interest is estimated at approximately 4.5 Tcf after completion of this acquisition.
• The Riley Ridge Unit and the adjoining acreage is located in the prolific LaBarge Field, from which natural gas, helium and CO2 are currently being produced and sold, which is also the same reservoir from which the Riley Ridge Unit will produce.
• First production of natural gas and helium is expected to occur during the 4th quarter of 2011.
• The development costs associated with the incremental interest in the Riley Ridge Unit are expected to add approximately $50 million to the Company's 2011 capital spending, depending upon how much capital is spent between the April 1 effective date and closing.
• Current operations include the completion of the producing wells and completion of the construction of the natural gas and helium processing facilities that will separate the natural gas and helium from the full well stream, which consists of approximately 65% CO2, 19% natural gas, 5% hydrogen sulfide (H2S), 0.6% He, and the remainder other gases. Initially the operational plans include the re-injection of the CO2 and H2S into the producing formation until a planned CO2 pipeline can be built to the field.
• This acquisition results in Denbury becoming the operator of the project and owning 100% of the working interest in the Riley Ridge Unit. In addition to owning and operating the Riley Ridge Unit, the Company is also acquiring operations and working interests in an adjoining 28,000 acres of which the Company previously only acquired CO2 rights. The Company has initiated the engineering and design of the CO2 capture facility for the Riley Ridge Unit, which is estimated to initially capture up to 130 MMcf/d of CO2. In addition to designing the CO2 capture facility for Riley Ridge the Company expects to begin preparing the development plan for the adjoining acreage, which when fully developed is expected to add an additional 450 to 500 MMcf/d of CO2 (100% working interest), or an estimated total CO2 production from this asset of 580 to 630 MMcf/d (100% working interest). The development plan to achieve these rates may take up to 10 years.
• The purchase price of $191 million consist of a $176 million payment at closing and a $15 million contingent payment to be paid at the time the gas processing facility is operational and meeting specific performance conditions. The existing operator is committed to maintaining and committing the existing development and construction teams to the project until such time as the specific performance conditions are met in order to provide continuity through start-up of the gas processing facility.
• Over the past 15 months, Denbury has been actively securing new sources of CO2 volumes and, with its new acquisition of Riley Ridge and the adjoining acreage, currently believes it has more CO2 than it needs to develop its existing CO2 enhanced oil recovery assets in the Rocky Mountains. These estimated CO2 volumes consist of the following:
  • Riley Ridge ultimate planned capacity - 580 to 630 MMcf/d (Own and Operate)
  • Lost Cabin – 50 MMcf/d (under contract from ConocoPhillips)
  • LaBarge – 50 MMcf/d (under contract from ExxonMobil)
  • Proposed DKRW facility - 200 MMcf/d (under contract from DKRW)
• The Company plans to fund the acquisition through borrowings on its existing bank credit facility.

Phil Rykhoek, CEO of Denbury, commented, "This acquisition combined with our contracts for CO2 from third parties, provides us with the necessary volumes of CO2 to develop our current Rocky Mountain CO2 EOR projects, plus additional volumes which can be used for future projects. With this acquisition, we will control this strategic asset, our 'Jackson Dome' of the Rockies. In one sense, Riley Ridge is even better than Jackson Dome as the projected methane and helium sales should pay for its development and the cost to extract and compress the CO2. We are about to begin construction on our first CO2 pipeline in this area, the Greencore line from Lost Cabin to Bell Creek. We should have our first tertiary oil production from this region in the next couple of years, most likely first from the recently acquired Grieve Field joint venture, followed soon thereafter by Bell Creek. We have come a long way in the Rockies in the last fifteen months and look forward to continued success in this region."

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Dominion Petroleum to Steer Block Offshore Kenya

- Dominion Petroleum to Steer Block Offshore Kenya

Wednesday, May 18, 2011
Dominion Petroleum Ltd.

Dominion Petroleum has signed the Production Sharing Contract (PSC) for Block L9 in the Lamu Basin, offshore Kenya, giving the Company a 60% working interest and operatorship. The Company previously announced the award of L9 on 21st March 2011 and the PSC was signed yesterday by Dominion Petroleum and the Kenyan Ministry of Energy in Nairobi.

Dominion Petroleum shall now begin the initial exploration period of the PSC. The Company will reprocess 2,500km of 2D seismic data, carry out block wide G&G studies and acquire 500km2 of 3D seismic data in the initial two year exploration period. This will result in a minimum gross expenditure of $6.15mm. Following this initial two year period, the Company can enter the second two-year period by committing to drill a single exploration well.

Block L9 was one of the last remaining prospective opportunities for unlicensed acreage along the whole of the deepwater East African margin. The area is attracting increasing attention from large, well established competitors, as well as stimulating interest from new entrants. Block L9 bears many geological similarities to the Company's Block 7 offshore Tanzania and Dominion intends to use its existing knowledge of the regional geology to maximize the potential of the prospects within the PSC.

Dominion will coordinate exploration activities within the expanded portfolio offshore East Africa to better leverage experience in Tanzania and to achieve better cost efficiencies.

Andrew Cochran, Chief Executive of Dominion Petroleum, commented, "The signing of L9 in Kenya is a significant milestone for Dominion as our deepwater East Africa 'footprint' has grown substantially. We find ourselves amidst some very large companies in both Tanzania and Kenya, still being able to capture L9 under competitive terms in a competitive process. The inclusion of L9 in the deepwater portfolio means that 2012 will be a very active year for the company in what is becoming one of the 'hottest' emerging plays in Africa."

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Premier to Steer North Sea Fyne Block

Premier to Steer North Sea Fyne Block

Monday, April 04, 2011

Antrim Energy Inc.

Antrim announced that Premier has provided notice that it has elected to drill the East Fyne well under the Joint Venture and Earn-In Agreement with Antrim, previously announced October 6, 2010.

The East Fyne well is an appraisal well designed to de-risk the eastern extent of the Fyne Field in Block 21/28a UK Central North Sea, and is expected to be drilled before the end of 2011. Under the conditions of the previously announced transaction, the well will be drilled at no cost to Antrim and the cost of drilling, completion and/or abandonment deducted from Premier's carried contribution of up to $50 million assigned to offset all or a portion of Antrim's development expenses to bring the Fyne Field to production.

This election by Premier results in the transfer of a 39.9% working interest and operatorship of the Fyne Block 21/28a from Antrim to Premier. Antrim retains a 35.1% working interest in the block, with First Oil Expro Limited holding the remaining 25% working interest. The license assignment and transfer of operatorship under the Agreement is subject to partner approval and to the usual UK government approvals.

The Fyne Block 21/28a was assigned gross proved plus probable reserves of 23.3 million barrels of oil by independent engineering consultants McDaniel & Associates Consultants Ltd. as at Dec. 31, 2010. The Fyne Field is situated immediately west-southwest of the Guillemot group of oil fields, which have produced in excess of 70 million barrels of oil to date. Fyne is also located approximately 35 kilometres north of the recently announced Catcher and Burgman oil discoveries in Block 21/9, both of which have reservoirs of comparable age with those in the Fyne Field.

Drilling of the East Fyne well will be in addition to Antrim's recently announced drilling plans for two exploration wells in the Greater Fyne Area, the West Teal and Carra wells (Antrim 100%). Premier retains a right to participate up to 50% in the Greater Fyne Area exploration program, which is due to commence mid-year 2011.