9th Aug 2007 14:40
Cardinal Resources plc09 August 2007 CARDINAL RESOURCES PLC SIGNS ADMINISTRATIVE AND SERVICES AGREEMENT. LONDON - 9 August 2007 Cardinal Resources plc (AIM:CDL) ("Cardinal" or "the Company"), an independentoil and gas exploration and production company operating in Ukraine, todayannounces that it has entered into an administrative and technical servicesagreement ("the Agreement") pursuant to which Cardinal has undertaken to providecertain services to Condor Exploration, Inc ("Condor"), a company with oil andgas exploration and development assets in Columbia. Agreement highlights: • Cardinal will provide administrative and technical advisory services to Condor in relation to Condor's exploration and development assets in Colombia • Cardinal will receive an immediate cash payment of $675,000 • Cardinal will receive an ongoing quarterly administration fee of $250,000 • Cardinal will also receive a 6.75% equity interest in Condor in lieu of cash-based reimbursement for historical due diligence related expenditure and Cardinal management's time allocated to the due diligence process • Robert J Bensh, Chairman and CEO of Cardinal has joined the Board of Condor Transaction rationale: The signing of the Agreement follows the statement in Cardinal's 2006 AnnualReport and Accounts that the Company was negotiating an outsourcing agreement toprovide services to a third party which would utilise the Company's existingresources to deliver an additional revenue stream which could be offset againstCardinal's fixed costs. About Condor: Condor is a privately-owned and Delaware-incorporated company which wasestablished earlier this year to undertake the acquisition, development andoperation of hydrocarbon assets in Colombia. Condor has an economic interest infuture production from three contract areas which are located in the MiddleMagdalena and Llanos Basins, Colombia. Condor's strategy is to develop the contracted areas and conduct high impactexploration and development projects within its portfolio. Hares Group Energy Limited, a subsidiary of Hares Group Limited which is a 19.2%shareholder in Cardinal, owns a 10% equity interest in Condor. No director oremployee of Cardinal owns a personal interest in Condor. The remainder ofCondor's shareholders are various institutional and private investors. Key terms of the Agreement: Cardinal has undertaken to use its existing corporate infrastructure, personnel,commercial relationships, as well as various other resources, as appropriate, toprovide the following services: • advice on the exploration and development of Condor's existing assets; • advice on general, strategic, administrative and technical support services; • advice on financing, planning, accounting, taxation and legal matters and • advice on business development issues. The Agreement will have an initial term of one year and will be capable ofrenewal annually thereafter, unless terminated by either party, which must bedone by serving notice 90 days' in advance. The Agreement may be terminated atCondor's election in the event that: • Cardinal is in material breach of its obligations under the Agreement; • A change of control of Cardinal occurs, with control for this purpose being a person or persons acting in concert holding more than 50% of Provider's ordinary share capital; • Robert J. Bensh is no longer serving in an executive capacity with Cardinal (agreed at the request of Condor). Cardinal's equity interest in Cardinal would survive a termination of theAgreement. In the event that Cardinal considers that it provides more advice and assistanceto Condor than was reasonably envisaged at the time of the Agreement, it shallbe entitled to seek to increase its quarterly administration fee, but suchincrease would be subject to consent of a key Condor shareholder. Based oncurrent roles and responsibilities CEO Robert J. Bensh and COO Cliff M Westwould each allocated approximately 4 days per month to Condor-related activity. One of Condor's other shareholders has provided a loan to the company. All otherequity interests in Condor, including that of Cardinal, will be pledged to thelending shareholder pending full repayment of this loan. The Directors of Cardinal believe that Cardinal has considerable and valuableregional expertise within the Company's senior management. Cliff M West has beeninvolved in South American energy projects since 1987, whilst Robert J Benshpreviously worked as an adviser to the government of the Republic of Colombiaduring the 1990s. Both have an extensive network of contacts within theColumbian industrial and political spheres. Commenting today Robert J. Bensh said: "This deal represents an excellentopportunity to gain an interest in undervalued high-margin assets in an areawhere we have considerable technical and regional expertise. The Agreement hasan immediate positive impact on Cardinal's current cash flow and will provideadditional cash flow going forward. Condor also has potential for considerableupside, should its exploration and development based growth strategy provesuccessful". For further information please contact: Cardinal Resources Charles Green / Natalia Egorova +44 (0) 20 7936 5250 [email protected] College Hill +44 (0) 207 457 2020 Nick Elwes/Paddy Blewer Nominated Adviser Nabarro Wells & Co. Limited +44 (0) 20 7710 7400 John Wilkes / Marc Cramsie [email protected] Notes to Editor Cardinal Resources plc is an independent oil and gas company engaged in theacquisition, development, production and exploration of oil and natural gasproperties in Ukraine. Cardinal is an experienced operator in the countryfocused on expanding its existing operations through the farm-in or acquisitionof additional upstream oil and gas assets that can be further developed throughthe application of modern technology and expertise. Condor is a privately-owned and Delaware-incorporated company which wasestablished earlier this year to undertake the acquisition, development andproduction of hydrocarbon assets in Colombia. Condor has an economic interest infuture production from three contract areas which are located in the MiddleMagdalena and Llanos Basins, Colombia. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Cloudbreak