AIM-listed Xtract Energy has concluded negotiations with Global Oil Shale (GOS) group over Xtract's oil shale tenements at Julia Creek in Queensland, Australia.
Under the terms of the agreement, Xtract will assign its oil shale rights in Julia Creek to GOS in exchange for a strategic equity stake in GOS of six million shares on signing the share purchase agreement and satisfying all closing commitments and a further 1.5 million shares in GOS in the event of its planned IPO (Initial Public Offering).
In addition, Xtract will have a long-term interest in the Julia Creek project through a 1% net smelter loyalty and an initial cash payment of AU$ 50,000 (£32,562) payable on signing the share purchase agreement and prior to GOS' commitment to a full work programme on Julia Creek.
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The Julia Creek tenements cover an area of 709 square kilometres and contain JORC-defined indicated and inferred resources of 2.18bn barrels of shale oil at an average grader of 61 litres per tonne at zero moisture.
In a related transaction, Xtract has also agreed to sell its entire 70% interest in Xtract Energy (Oil Shale) Morocco S.A. to GOS subject to satisfying certain closing conditions.
Commenting on the transaction, executive chairman of GOS, said: "The disposal of Julia Creek and the sale of Xtract Energy (Oil Shale) Morocco S.A. to GOS will enable Xtract management to concentrate the focus of the company on conventional oil and gas opportunities."
Petri Karjalainen, Executive Chairman of GOS, commented: "Global Oil Shale is pleased to have concluded this agreement and looks forward to Xtract Energy joining as a strategic equity partner in GOS as well as retaining its ongoing interest in the Julia Creek project through the long-term royalty structure."
MF
