Oil and gas exploration company EnerGulf Resources has signed a Letter of Intent to acquire certain interests in offshore Gulf of Mexico oil and gas prospects from Texas South Energy.
By signing the letter of intent with Texas South, EnerGulf will participate in six offshore Gulf of Mexico prospects owned and operated by GulfSlope Energy.
Subject to the execution of the agreements and EnerGulf’s financial obligations, the company will participate in drilling one well on Block 378, Vermilion Area, South Addition (Canoe Prospect) and a second well on either the Canoe Prospect or Block 375, Vermilion Area, South Addition (Selectron Shallow Prospect).
The company said it has made a $200,000 payment for its interest in the Canoe Prospect. On June 27, 2016, it will pay an additional $200,000 for its interest in the Selectron Shallow Prospect. Upon payment, EnerGulf will own a 43.75% non-operated working interest and will have certain cost interest obligations in the Canoe and Selectron Shallow Prospects.
The letter also provides for the payment of $400,000 on June 27, 2016 for the acquisition of an undivided 25% non-operated working interest in the following sub salt prospects: Block 870, Ewing Bank and Block 914, Ewing Bank (Alpha Prospect); Block 904, Ewing Bank and Block 948, Ewing Bank (Beta Prospect); Block 348, Ship Shoal, South Addition (Baryon Prospect); and Block 371, Eugene Island, South Addition (Proton Prospect). All blocks are operated by GulfSlope.
As additional consideration, EnerGulf has agreed as a term of the definitive agreement to issue to Texas South a warrant to purchase up to 7,000,000 common shares of EnerGulf exercisable for a three year term at a price of CDN$0.06 per share.
EnerGulf noted that if it fails to meet any payment obligation under the letter of intent, it will lose the right to participate in the prospect to which such non-payment applies.
Furthermore, its participation right in any funded prospects will be reduced proportionately based on the actual payments made relative to the total payment obligations under the letter of intent.