REG - Argos Resources Ltd - Completion of Participation Agreement <Origin Href="QuoteRef">ARGR.L</Origin>

Argos ResourcesAnnouncement

22/02/2016 10:00

RNS Number : 7203P
Argos Resources Ltd
22 February 2016
22 February 2016
ARGOS RESOURCES LIMITED
("Argos" or "the Company")
Completion of Participation Agreement
Argos Resources Limited (AIM: ARG.L), the Falkland Islands based company which holds a 5% Overriding Royalty Interest in Licence PL001 in the North Falkland Basin announces that it has signed a Participation Agreement with Noble Energy Falklands Limited (Noble) and Edison International S.p.A (Edison) that replaces the Farmout Agreement between the Parties.
The Company announced on 12 February that it had received notification from Noble, the Operator of Licence PL001, of an event of Force Majeure resulting in them being unable to drill an exploration well on the Licence using the Eirik Raude rig. It was also announced at that time that a new Participation Agreement between the Parties would be entered into, replacing the Farmout Agreement, to address the various changes created as a consequence of the Force Majeure event.
The principal terms of the Participation Agreement are:
 
The Farmout Agreement has been terminated and replaced by the Participation Agreement on the effective date of the execution of the Participation Agreement
 
The Parties confirm that the Overriding Royalty Interest in favour of Argos remains in place at 5% of the petroleum delivered, appropriated and won from Licence Area PL001
 
The Parties have agreed that Noble and Edison will make quarterly cash payments to Argos totalling 300,000 per annum in place of the Pre-Production Payments provided for within the Farmout Agreement
 
The terms of Licence PL001 provide that a well must be drilled by the end of the Second Licence Term in November 2016 if the Licence is to be extended into Phase 3.The Parties have agreed to seek an extension of the Licence period from the Government to allow for additional time for such a well to be drilled as provided in the Licence
The ongoing cash payments are lowerthan the previously announced US$800,000 annual payment contained in the Farmout Agreement, to reflect the longer period over which future payments may now be made. The Company has already implemented cost reductions to ensure that these payments should be sufficient to meet its ongoing running costs.
Ian Thomson, Chairman of Argos, commented:
"The Participation Agreement has been completed promptly and in a very co-operative way between the Parties as we respond together to the consequences of the Force Majeure event. Our Overriding Royalty Interest in the Licence will continue into any extension period agreed and our future running costs are covered, so we remain well positioned. Both Noble and the Company continue to be very positive about the exploration potential of the Licence Area".
For further information:
Argos Resources Limited
(+500 22685)
www.argosresources.com
Ian Thomson, Chairman
John Hogan, Managing Director
Cenkos Securities plc (Nomad & Broker)
Derrick Lee (+44 131 220 9100)
Neil McDonald (+44 131 220 6939)
Citigate Dewe Rogerson (Communications Adviser)
(+44 20 7638 9571)
Martin Jackson
Shabnam Bashir

This information is provided by RNS
The company news service from the London Stock Exchange
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