|By Marketwired .||
|April 10, 2014 05:54 PM EDT||
CALGARY, ALBERTA -- (Marketwired) -- 04/10/14 -- CYGAM Energy Inc. ("CYGAM") (TSX VENTURE:CYG) is pleased to provide an operational update for the TT Field, situated in the Bir Ben Tartar Production Concession (the "BBT Concession") in Tunisia and to announce the execution of a Sale and Purchase Agreement relating to the Sud Tozeur Permit. Through a wholly-owned subsidiary, CYGAM holds a 14% working interest in the BBT Concession and a 100% interest in the Sud Tozeur exploration permit. Partners in the BBT concession are block holder, Enterprise Tunisienne D'Activites de Petrolieres ("ETAP") and Chinook Energy (86% interest and operator).
BBT Concession Production Update
Gross production from the TT Field increased to an average of 2,498 bopd (219 bopd net to CYGAM, post ETAP) during March 2014 due to production from new wells TT15, TT28 and TT18 which were completed during the first quarter of 2014.
The partners have initiated a secondary recovery scheme through the conversion of the TT12 well to water injection which commenced in April 2014.
Work continues on installing an early production facility and gathering system which will result in existing wells being flow line connected to a central tank battery and processing facility. It is expected that this substantial infrastructure upgrade will be completed during 2014.
2014 BBT Drilling Program
A total of five vertical development wells have been successfully drilled to date. Of these four have been completed and three are on production. One further vertical well is planned to be drilled in the current six well development program.
Sud Tozeur Exploration Permit (Cygam 100%)
Rigo Oil Company Limited ("Rigo"), a wholly owned subsidiary of CYGAM, has entered into a Sale and Purchase Agreement with YNG Exploration Limited ("YNG"), a private company, whereby YNG will acquire Rigo's 100% interest and all associated commitments in the onshore Sud Tozeur exploration permit in Tunisia. The transaction is subject to a number of terms and conditions being satisfied including: Tunisian government approval to transfer the permit to YNG; extension of the permit into the First Renewal Period of three years; carryover and potential increase of the current 3D seismic acquisition commitment into the First Renewal Period; payment of a US$5.0 million Compensatory Payment in lieu of the undrilled commitment well with this payment being deferred and paid in installments on terms to be agreed with the Tunisian government.
Subject to these terms and conditions, as compensation to Rigo, YNG will pay a total of US$2.0 million towards Rigo's $5.0 million Compensatory Payment obligation. It is expected that YNG will pay the first and final US$1.0 million installments of the Compensatory Payment to the Tunisian authorities on Rigo's behalf. Rigo will retain responsibility for the remaining US$3.0 million of the Compensatory Payment installments which, for Rigo, are anticipated to commence in 2015.
CYGAM's CEO David Taylor commented: "We are very pleased to have entered into the Sud Tozeur transaction with YNG who are enthusiastic about the exploration potential of the permit. Whilst we still have to secure all necessary government approvals, the anticipated outcome is a win-win for all stakeholders. The future exploration activity in the permit will benefit Tunisia whilst, at the same time, Rigo's future work program commitments are eliminated and CYGAM's exposure to substantial penalties materially reduced."
About CYGAM Energy Inc.
CYGAM is a Calgary based exploration company with extensive international exploration permits and a producing property in Tunisia. The main focus of CYGAM is the acquisition, exploration and development of international oil and gas permits, primarily in Italy, Tunisia and the Mediterranean Basin. CYGAM currently holds various interests in five exploratory permits in Italy plus three exploratory permits and the BBT Production Concession in Tunisia which together encompass a total of approximately 2.5 million gross acres. Following closing of the transaction with YNG, total company acreage would reduce to approximately 1.4 million gross acres.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release
Forward Looking Information
In the interest of providing shareholders and potential investors with information regarding CYGAM, including management's assessment of the future plans and operations of CYGAM, certain statements contained in this news release constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities legislation. In particular, this news release contains, without limitation, forward-looking statements pertaining to: future drilling; operations (including the number of wells, locations and target zones); water injection plans; strategies to increase water handling capacity; infrastructure upgrades and other future drilling and completion operations and the timing thereof as well as Tunisian government approval of the transfer of the Sud Tozeur permit to YNG, the extension of the permit into the First Renewal Period of three years and related terms thereof, and the payment terms relating to the Compensatory Payment.
With respect to the forward-looking statements contained in this news release, CYGAM has made assumptions regarding, among other things: the ability of the Operator to continue to operate in Tunisia with limited logistical, security and operational issues; the ability of the Operator to obtain equipment in a timely manner and to carry out drilling and completion operations; the results of geological, geophysical and reservoir analysis and testing and completion operations; commodity prices; the receipt of required government and regulatory approvals; and global economic conditions. Although CYGAM believes that the expectations reflected in the forward-looking statements contained in this news release, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this news release, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur.
By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the forward-looking statements will not occur, which may cause CYGAM's actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, without limitation: political and security risks associated with the Operator's Tunisian operations, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve and resource estimates, inability to retain drilling rigs and other services, capital expenditure costs, including drilling, completion and facilities costs, unexpected decline rates in wells, delays in projects and/or operations, wells not performing as expected, delays resulting from or inability to obtain the required regulatory approvals, CYGAM's ability to access sufficient capital from internal and external sources; and risks associated with the operation of CYGAM's assets by third parties, including the limited ability of CYGAM to exercise influence over the operation of those assets or their associated costs, the timing and amount of capital expenditures, the operator's expertise and financial resources, the approval of other participants, and the selection of technology and risk management practices. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the forgoing list of factors is not exhaustive. Additional information on these and other factors that could effect CYGAM's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and CYGAM does not undertake any obligation to update publicly or to revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.