15th Feb 2006 14:16
Forum Energy Plc15 February 2006 15 February 2006 Forum Energy Plc Board approve acquisition Forum Energy Plc (the "Company" or "Forum"), the AIM quoted oil, gas and coalcompany with assets in the Philippines, announces that further to theannouncements made by the Company on 3 February 2006 and 17 November 2005, andas summarised in the Company's admission document, the Board of Forum has agreedterms for the acquisition of Basic Petroleum and Mining Inc. ("BPMI"), (awholly-owned subsidiary of Basic Consolidated, Inc. ("Basic")). The merger of Basic's petroleum interests with those of the Company is subjectto approval from the shareholders of Basic and from the Government of thePhilippines. Details of the acquisition were released to Basic shareholdersearlier today and an EGM will be held on 29 March 2006 to approve theacquisition of BPMI. The full release by Basic is appended at the end of thisannouncement. The acquisition will provide Forum with initial net production of approximately40 barrels of oil per day (bopd), and varying interests in nine oil fieldsoffering additional production and reserve potential. Forum Chief Executive David Robinson said: "This acquisition creates anexceptional opportunity for us as we seek to grow our Company and create maximumvalue for our shareholders. It will complement our already strong asset base inthe Philippines, giving us immediate oil production with tremendous potential toincrease it through improved production technology." Under the terms of the agreement, Forum will pay US$5 million over the next 12months in a combination of cash and shares (subject to hold periods) to acquire100% of BPMI. Further cash payments of up to $2 million will become available ifthe acquired interests produce more than 5.4 million barrels of oil. BCI, thecurrent owner of BPMI, may also ultimately receive up to $10 million of costrecovery amounts that are associated with the interests, but not until Forum hasrecovered 100% of its invested capital. The BPMI assets include interests in nine offshore fields as follows: Nido(8.47%), Matinloc and Pandan (12.41%), North Matinloc (19.46%), Libro (28.6%),Tara (10%), Bonita (7.03%), West Linapacan (9.1%), Galoc (8.17%) and a 27.7%interest in SC41 situated within the Sulu Sea and covering some 4,820 square km.SC41 is thought to have significant exploration potential. This acquisition will increase the Company's interests in the offshore oilfields of NW Palawan and will provide the Company with immediate production. Forum's existing assets, focused entirely in the Philippines, include the highlypromising Sampaguita gas discovery within the GSEC101 (Reed Bank) offshorelicence area, and the SC40 (Cebu) licence with known onshore and offshore gasand oil discoveries, where the Libertad gas field was recently declaredcommercial. The company also holds two coal operating contracts on Cebu Islandwith estimated proven and probable reserves of 4.9 million tonnes. For further information please contact: David Robinson, Chief Executive, Forum Energy Plc: +44 (0) 19 3244 5346Adam Westcott, Noble & Company Limited: +44 (0) 131 225 9677Ian Foster, First City Financial Public Relations: +44 (0) 20 7436 7486 +44 (0) 77 3918 5050 Or visit the Company's website: www.forumenergyplc.com Announcement as released by Basic on 15 February 2006: PROPOSED DISCLOSURE TO SEC/PSE ON FEBRUARY 15, 2006 The Board of Basic Consolidated, Inc. (BCI) has approved today, February 15,2006, 5:30 P.M., a Sale and Purchase Agreement (SPA) with Forum Energy PLC.(FEP), subject to the final approval by the stockholders of BCI during a SpecialStockholders' Meeting scheduled on March 29, 2006. The SPA provides for theacquisition by Forum of the 100% shareholdings of BCI in its wholly ownedsubsidiary, Basic Petroleum and Minerals, Inc. (BPMI). I. REASON OR PURPOSE OF THE SALE To consolidate and generate investment funds for its oil and gas projects andother viable businesses. II. TERMS AND CONDITIONS OF THE SALE 2.1. Subject Matter - all the 500,000,000 shares of stock of BPMI owned by BCI 2.2. Consideration - Total of $17,000,000.00 broken down as follows: 2.2.1. $5,000,000.00 payable by FEP to BCI as follows: 2.2.1.1. Cash and FEP Shares • EIGHT HUNDRED EIGHTY THOUSAND - payable upon compliance of all the DOLLARS (US$880,000.00) conditions precedent as provided in the SPA. • SIX HUNDRED SIXTY THOUSAND - payable within SIX (6) months from DOLLARS (US$660,000.00) the first payment as provided in Section 2.2.1.1. • SIX HUNDRED SIXTY THOUSAND - payable within ONE year from the DOLLARS (US$660,000.00) first payment as provided in Section 2.2.1.1. • TWO MILLION TWO HUNDRED THOUSAND - to be paid with 1,047,953 fully DOLLARS (US$2,200,000.00) paid shares of stock of FEP, which shares shall be subject to a holding period of twelve (12) months from date of final execution of SPA. • SIX HUNDRED THOUSAND DOLLARS - to be paid with 285,806 fully paid (US$600,000.00) shares of stock FEP, which shares shall be subject to a holding period of eighteen (18) months from date official execution of SPA, or upon completion of Farm-ins in certain Service Contracts, whichever comes first. - The number of FEP shares (1,047,953 and 285,806) was based on the closing share price of FEP on August 26, 2005 in accordance with the Memorandum of understanding (MOU) dated August 26, 2005 which was computed at ONE HUNDRED SIXTEEN POINT FIVE (116.5) per pence per share at the Pound Sterling : US Dollar rate of exchange of 1.802. 2.2.2. $12,000,000.00 shall be payable by FEP to BCI, upon fulfillment of thefollowing: 2.2.2.1. From FEP's utilization of the Historical Cost Recovery (HCR)Accounts of BPMI, US Dollar Ten Million ($10,000,000.00) shall be payable to BCIin this manner: • For every US Dollar One ($1.00) booked in the accounting records ofFEP and/or BPMI, as acquired by FEP under this SPA, from the Historical CostRecovery Accounts of BPMI , Twenty Five Percent (25%) will be retained by FEP,and the balance of Seventy Five (75%) will be paid in cash to BCI until thetotal amount of US Dollar Ten Million ($10,000,000.00) is fully paid to BCI. Thepayments shall be due within Ten (10) working days from the recording of thesaid utilization in the books of account of FEP and/or BPMI. • In case FEP assigns or sells any or all of the Historical CostRecovery accounts to a third party for a cash consideration, the correspondingamount or the whole amount of US Dollar Ten Million ($10,000,000.00) shall bedeemed as due and payable in cash to BCI within Ten (10) days from date of suchsale or assignment. In the event that FEP assigns or sells any of these HCR fora corresponding interest in another contract area/s, then FEP will recognizesuch HCR value as still due to BCI and will be added to the Cost Recovery of anyof the areas which still remains under the ownership of FEP or as part of FEP'soperating costs in the event that the remaining HCR's are no longer sufficient. • For purposes of this SPA, HCR refers to all the expenditures of BPMIin the exploration, development, production and other related activities in thecontract areas referred to in the SPA as confirmed by the DOE and/or respectiveoperators of the service contracts excluding SC 42 and GSEC 94. 2.2.2.2. US Dollar Two Million ($2,000,000.00) payable to BCI under thefollowing formula: FEP shall pay BCI the amount of US Dollar Two Hundred Thousand ($200,000.00) incash, for every two hundred thousand (200,000) barrels of oil produced from theoil assets subject of this SPA in excess of five million four hundred twentythousand (5,420,000) barrels, until the whole amount of US Dollar TwoMillion ($2,000,000.00) is fully paid to BCI. The payments shall be due withinThirty (30) working days from the delivery of said production to the buyer(s). 2.3. Basis upon which the consideration was determined Consideration was based on the assessment by Third Party Experts on theestimated value of the Company's share in the oil reserves of the producing andexploratory areas covered by certain Service Contracts with the DOE, wherein BCIis a participant. III. BPMI owns participating interest and/or cost recovery accounts in thefollowing Service Contracts (SC) and Geophysical Survey and ExplorationContracts (GSEC): S.C. 14 NW Palawan S.C. 6-A & 6-B NW Palawan S.C. 41 Sandakan Basin S.C. 42 NW Palawan GSEC 94 Offshore W Palawan IV. Background of FEP, material relationship between BCI and FEP, its directorsor officers or any of its affiliates. Forum Energy plc is an oil, gas and coal company focused exclusively on thePhilippines. Its current assets include the highly promising Sampaguita gasdiscovery within the GSEC 101 (Reed Bank) offshore license area, and the SC 40(Cebu) license with known onshore and offshore gas and oil discoveries, wherethe Libertad gas field was recently declared commercial. The company also holdstwo coal operating contracts on Cebu Island with estimated proven and probablereserves of 4.9 million tones. Forum Energy joined London's AIM market on August 2nd 2005 having raised a totalof £14.4 million in pre-IPO and IPO capital raising rounds. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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