TIDMRMP
RNS Number : 4629V
Red Emperor Resources NL
24 July 2018
24 July 2018
Red Emperor Resources NL ("Red Emperor")
Quarterly Reports
For The Period Ending 30 June 2018 and Appendix 5B
The Board of Red Emperor Resources NL (ASX/AIM: RMP) ("Red
Emperor" or the "Company") provides the following commentary and
Appendix 5B for the June 2018 Quarter.
Highlights
-- Red Emperor signed a binding term sheet to acquire and drill
a significantly large oil prospect on the prolific Alaska North
Slope
-- The drill target is immediately adjacent to and a direct
analogue of the successful Horseshoe-1/1A oil well drilled by the
Repsol-led joint venture in 2017
-- Horseshoe is part of the billion-barrel plus Nanushuk oil
play fairway, one of the largest conventional oil fields discovered
in the US in more than 30 years
-- Gracjan Lambert joined the Company as the new Chief Executive Officer
Alaska North Slope
During the quarter, Red Emperor executed a binding term sheet
agreement that will see the Company participate in the drilling of
a highly prospective Nanushuk oil trend exploration well on the
Alaska North Slope in early 2019. Final definitive agreements are
expected to be executed in July with Red Emperor, along with its
Consortium Partners, having exclusivity over the opportunity.
Commercial Agreement
Red Emperor, along with Otto Energy Limited (ASX: OEL) ("Otto")
and 88 Energy Limited (ASX: 88E) ("88 Energy") (collectively the
"Consortium Partners"), executed a binding term sheet agreement
with Great Bear Petroleum Ventures II LLC ("Great Bear") to acquire
the majority of Great Bear's working interest in four leases on the
western flank of the Alaska North Slope, specifically ADL#s 391718,
391719, 319720 & 39172; collectively the "Western Blocks".
Further information in relation to each of the four lease areas
was provided in the Company's ASX and AIM announcements dated 25
June 2018.
In consideration for acquiring the leases, the consortium
partners will undertake the following:
-- Provide a performance bond to the State of Alaska of US$3.0
million (RMP share US$1.05m) by 31 July 2018; and
-- Drill an exploration well in the Western Blocks by 31 May 2019.
The Consortium Partners will provide the following consideration
to Great Bear:
-- Free carry Great Bear for a 10% working interest in the
leases for the drilling, completion and production testing of an
initial test well, including all associated costs such as
permitting, ice road access and test production disposition;
-- Pay US$500,000 (RMP share US$175,000) upon execution of the definitive agreements;
-- Pay US$500,000 (RMP share US$175,000) upon receipt of final
permits necessary to drill the initial test well, in any case by no
later than 31 December 2018; and
-- Provide an option for Great Bear to acquire a further 10%
working interest prior to the initial test well by paying its
pro-rata share of all costs of the initial test well or, if
exercised within 6 months of completing the initial test well, by
paying 200% of its pro-rata share of all costs of the initial test
well.
Drilling Planning
88 Energy will manage the drilling of the initial test well
within the Western Blocks on behalf of the joint venture and
Consortium Partners. 88 Energy has already commenced a rig market
survey and is identifying a suitable rig with which to commence the
drilling operations. Given that the location is only accessible
through an ice road, drilling will be undertaken during the winter
operational months once the Alaska North Slope is opened for
operations. The joint venture has met with the Alaska Department of
Natural Resources to expedite required approvals and permits to
undertake the initial test well.
Lease Terms
The four North Slope leases comprising the Western Blocks have
recently been extended by three years with the term now expiring on
30 April 2021. During this period the joint venture is required to
post a US$3.0 million performance bond and undertake the drilling
and testing of an initial test well by no later than 31 May 2019.
The leases have an annual rental of US$10.00 per acre or fraction
thereof and have been fully paid through to May 2019.
Funding
The well is estimated to cost approximately US$15 million (100%
dry hole cost) of which Red Emperor's share will be US$5.25
million. There is also a performance bond of US$3 million (RMP
share US$1.05m) to be posted to the Alaska DNR by 31 July 2018. The
bond will be refunded if the well is drilled before 31 May 2019.
The Company expects to fund cost of the bond and drilling of the
well from its current, strong cash position. Red Emperor's working
interest will most likely be held through a
soon-to-be-incorporated, wholly owned subsidiary.
Philippines (SC 55)
In April, the Company finally received official confirmation
from the Philippine Department of Energy (DoE) ratifying the
request for the transfer of participating interests in Service
Contract no. 55 (SC55) from Otto Energy Limited (ASX: OEL) to its
partners, Century Red Pte. Ltd (a 100% owned subsidiary of Red
Emperor Resources NL), PaIawan55 Exploration & Production
Corporation and Pryce Gases, Inc.
Red Emperor's equity interest in Block SC 55 is now 37.5%
(previously 15%) after the DoE found the partners to be
"Financially qualified to assume the proposed interests. Legally
qualified to assume the participating interest from Otto Energy
considering that they are existing petroleum companies operating
either as operator and/or consortium members in petroleum service
contracts; And technically qualified, as exemplified by the joint
cooperation and completion of previous exploration activities, such
as the drilled Hawkeye-1 well."
As a result, the participating interests in SC55 are as
follows:
Company Participating Interests
Palawan55 Exploration & Production Corporation
(Operator) 37.50%
------------------------
Century Red Pte. Ltd (Red Emperor Resources) 37.50%
------------------------
Pryce Gases, Inc. 25.00%
------------------------
Total 100%
------------------------
Subsequent to the quarter end, nominated "Operator" Palawan55
chaired an Operating Committee Meeting to discuss the proposed
amendments to the Joint Operating Agreement and, having recently
completed their evaluation of prospective geophysical contractors,
propose a Work Program and Budget for the remainder of the
moratorium period. Additionally, each company was asked to identify
their representative to the Operating Committee. A formal vote on
the proposed resolutions is expected in the coming weeks.
California
During the quarter, Red Emperor's proposed Californian Joint
Venture partner, Oil Ventures Limited (Oil Ventures), were
unsuccessful in agreeing commercial terms to acquire a number of
leases prospective for oil & gas in the Sacramento Gas
Basin.
As a result, Red Emperor and Oil Ventures entered into an
amended HoA whereby if either party wishes to lease or explore in
Areas of Mutual Interest (AMI) in the Sacramento Basin before May
1, 2020 they will do so under certain conditions (refer to
announcement dated 17 May 2018). While the Company was disappointed
in not being able to execute any lease agreements as anticipated,
it deployed minimal capital in pursuit of the venture and was
grateful for the opportunity provided.
Corporate
Board and Management Changes
During the quarter, Red Emperor appointed Mr. Gracjan P. Lambert
as its new Chief Executive Officer ("CEO"). Mr. Lambert brings with
him a wealth of technical and commercial experience in the global
oil and gas industry, built over more than 20 years working in
Europe, Asia (including the Middle East), Australia, North and
South America, and Africa. He has spent the last 10 years at
ExxonMobil in diverse roles including managing global field
operations and leading complex international commercial
negotiations. Over the course of his career he has leveraged his
proven commercial track record and technical expertise to inform
profitable decision making and leadership. Mr. Lambert holds a PhD
in Exploration Geophysics from Curtin University in Western
Australia and will be relocating back to Perth to fulfil his role
as CEO.
As well as this significant addition to the senior management
team, the Company also appointed Mr. Aaron Bertolatti to the Board.
Mr. Bertolatti, who is currently Red Emperor's Company Secretary,
is a qualified Chartered Accountant with over 10 years' experience
in the mining industry and accounting profession.
Mr Nathan Rayner resigned as non-executive director during the
quarter. The Company again thanks Mr. Rayner for his work over the
past 3 years and wishes him well in the future.
Other
At the end of the Quarter the Company had cash at bank of
$10.34m. Refer to the attached Appendix 5B for further details.
For further information please visit
http://www.redemperorresources.com/ or contact:
Red Emperor Resources:
Greg Bandy +61 8 9212 0102
Grant Thornton UK LLP (Nominated Adviser):
Philip Secrett, Jen Clarke 020 7383 5100
About Red Emperor Resources NL
Red Emperor Resources NL is an Australian natural resource
exploration company listed on both the Australian Securities
Exchange (ASX: RMP) and Alternative Investment Market (AIM: RMP).
Red Emperor has oil and gas interests on the Alaska North Slope and
in South East Asia.
Red Emperor has executed a binding term sheet that will see the
Company participate in the drilling of a highly prospective
Nanushuk oil trend exploration well on the Alaska North Slope in
early 2019, with an estimated prospective resource volume of 400
MMbbls. The drill target is immediately adjacent to and a direct
analogue of the Horseshoe-1/1A oil well drilled. Horseshoe is part
of the billion-barrel plus Nanushuk oil play-fairway, one of the
largest conventional oil fields discovered in the US in more than
30 years.
Red Emperor also holds an equity interest of 37.5% of Block
SC55, which is located in the southwest Palawan Basin. SC55 covers
an area of 9,880km2 and was awarded to Otto Energy Investments Ltd
(formerly NorAsian Energy Ltd) in 2005. It is a deep-water block in
the middle of a proven regional oil and gas fairway that extends
from the productive offshore Borneo region in the southwest to the
offshore Philippine production assets northwest of Palawan.
Red Emperor participated in a USD $25m exploration well
(Hawkeye-1) within the block in 2015 and contributed in excess of
AUD $5m towards drilling costs. Over USD $50m has been spent
exploring SC55 to date and a number of drill-ready targets remain,
including the "Cinco" gas prospect which has a best estimate
prospective resource of 1.6tcf recoverable gas.
Appendix 5B
Mining exploration entity and oil and gas exploration entity
quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97,
01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16
Name of entity
-----------------------------------------------------
RED EMPEROR RESOURCES NL
ABN Quarter ended ("current quarter")
--------------- ----------------------------------
99 124 734 961 30 June 2018
----------------------------------
Consolidated statement of cash Current quarter Year to date
flows $A'000
(12 months)
$A'000
1. Cash flows from operating
activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration & evaluation (23) (160)
(b) development - -
(c) production - -
(d) staff costs - -
(e) administration and corporate
costs (175) (807)
1.3 Dividends received (see note - -
3)
1.4 Interest received 33 135
1.5 Interest and other costs of - -
finance paid
1.6 Income taxes paid - -
1.7 Research and development refunds - -
Other (provide details if
material)
1.8 - Refund of exploration deposits 135 135
---------------- ----------------
Net cash from / (used in)
1.9 operating activities (30) (697)
----- ------------------------------------- ---------------- ----------------
2. Cash flows from investing
activities
2.1 Payments to acquire:
(a) property, plant and equipment - -
(b) tenements (see item 10) - -
(c) investments - -
(d) other non-current assets - -
2.2 Proceeds from the disposal
of:
(a) property, plant and equipment - -
(b) tenements (see item 10) - -
(c) investments - 10
(d) other non-current assets - -
2.3 Cash flows from loans to - -
other entities
2.4 Dividends received (see note - -
3)
2.5 Other (provide details if - -
material)
---------------- ----------------
Net cash from / (used in)
2.6 investing activities - 10
------- ----------------------------------- ---------------- ----------------
3. Cash flows from financing
activities
3.1 Proceeds from issues of shares - -
3.2 Proceeds from issue of convertible - -
notes
3.3 Proceeds from exercise of - -
share options
3.4 Transaction costs related - -
to issues of shares, convertible
notes or options
3.5 Proceeds from borrowings - -
3.6 Repayment of borrowings - -
3.7 Transaction costs related - -
to loans and borrowings
3.8 Dividends paid - -
3.9 Other (provide details if - -
material)
---------------- ----------------
3.10 Net cash from / (used in) - -
financing activities
------- ----------------------------------- ---------------- ----------------
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 10,308 10,921
Net cash from / (used in)
operating activities (item
4.2 1.9 above) (30) (697)
---------------- ----------------
Net cash from / (used in)
investing activities (item
4.3 2.6 above) - 10
4.4 Net cash from / (used in)
financing activities (item - -
3.10 above)
Effect of movement in exchange
4.5 rates on cash held 66 110
---------------- ----------------
Cash and cash equivalents
4.6 at end of period 10,344 10,344
------- ----------------------------------- ---------------- ----------------
5. Reconciliation of cash and Current quarter Previous quarter
cash equivalents $A'000 $A'000
at the end of the quarter
(as shown in the consolidated
statement of cash flows) to
the related items in the accounts
5.1 Bank balances 10,344 10,308
5.2 Call deposits - -
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
---------------- -----------------
Cash and cash equivalents
at end of quarter (should
5.5 equal item 4.6 above) 10,344 10,308
---- ----------------------------------- ---------------- -----------------
6. Payments to directors of the entity and Current quarter
their associates $A'000
Aggregate amount of payments to these parties
6.1 included in item 1.2 36
----------------
6.2 Aggregate amount of cash flow from loans -
to these parties included in item 2.3
----------------
6.3 Include below any explanation necessary to understand
the transactions included in items 6.1 and 6.2
----- -----------------------------------------------------------------
Payment of Directors Fees and Remuneration - $36k
7. Payments to related entities of the entity Current quarter
and their associates $A'000
7.1 Aggregate amount of payments to these parties -
included in item 1.2
----------------
7.2 Aggregate amount of cash flow from loans -
to these parties included in item 2.3
----------------
7.3 Include below any explanation necessary to understand
the transactions included in items 7.1 and 7.2
---- ----------------------------------------------------------------
N/A
8. Financing facilities available Total facility Amount drawn
Add notes as necessary for amount at quarter at quarter end
an understanding of the position end $A'000
$A'000
8.1 Loan facilities - -
------------------- ----------------
8.2 Credit standby arrangements - -
------------------- ----------------
8.3 Other (please specify) - -
------------------- ----------------
8.4 Include below a description of each facility above, including
the lender, interest rate and whether it is secured or
unsecured. If any additional facilities have been entered
into or are proposed to be entered into after quarter
end, include details of those facilities as well.
---- -------------------------------------------------------------------------
N/A
9. Estimated cash outflows for next $A'000
quarter
9.1 Exploration and evaluation 1,700,000
9.2 Development -
9.3 Production -
9.4 Staff costs -
9.5 Administration and corporate costs 250,000
9.6 Other (provide details if material) -
----------
9.7 Total estimated cash outflows 1,950,000
---- ------------------------------------ ----------
10. Changes in tenements Tenement Nature of interest Interest Interest
(items 2.1(b) reference at beginning at end
and 2.2(b) above) and location of quarter of quarter
10.1 Interests in N/A
mining tenements
and petroleum
tenements lapsed,
relinquished
or reduced
----- --------------------- -------------- ------------------- -------------- ------------
Interests in
mining tenements SC55 -
and petroleum Palawan
tenements acquired Basin,
10.2 or increased Philippines Service Contract 15% 37.5%
----- --------------------- -------------- ------------------- -------------- ------------
Compliance statement
1 This statement has been prepared in accordance with accounting
standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
Print name: Aaron Bertolatti
Date: 24 July 2018
Notes
1. The quarterly report provides a basis for informing the
market how the entity's activities have been financed for the past
quarter and the effect on its cash position. An entity that wishes
to disclose additional information is encouraged to do so, in a
note or notes included in or attached to this report.
2. If this quarterly report has been prepared in accordance with
Australian Accounting Standards, the definitions in, and provisions
of, AASB 6: Exploration for and Evaluation of Mineral Resources and
AASB 107: Statement of Cash Flows apply to this report. If this
quarterly report has been prepared in accordance with other
accounting standards agreed by ASX pursuant to Listing Rule 19.11A,
the corresponding equivalent standards apply to this report.
3. Dividends received may be classified either as cash flows
from operating activities or cash flows from investing activities,
depending on the accounting policy of the entity.
This information is provided by RNS, the news service of the
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END
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