VAST EXPLORATION INC. (TSX VENTURE:VST)
PRESS RELEASE | May 20, 2008
Vast Exploration Inc. – Completes Production Sharing Contract in the Kurdistan Region - Iraq
Calgary, Alberta, - Vast Exploration Inc. (“Vast” or the “Company”) (TSX-V: VST) is pleased to announce that with its consortium partner Niko Resources Ltd. (TSX: NKO), as operator, it has entered into a Production Sharing Contract (“PSC”) with the Kurdistan Regional Government - Iraq (“KRG” or “Government”) for the exploration, development and production of petroleum resources in the 846 square kilometre Qara Dagh Block in the Sulaymaniya Governorate of the Federal Region of Kurdistan – Iraq.
(Kurdistan License Map)
The Company has been involved in a competitive bidding process and advanced negotiations with the KRG over the past eight months. The final terms were agreed in principle late last year, subject to KRG approving the operator. Under the final agreement reached with the KRG, Niko Resources Ltd. shall act as operator for the block. Niko Resources Ltd., with a market capitalization in excess of $4.5 Billion, was selected by the Company as the operating partner due to its considerable international experience, including activities in India, Thailand and Bangladesh.
According to the terms of the PSC, the consortium has a 60% net participating interest, not subject to further dilution by the KRG. Vast and Niko Resources Ltd. each hold a 27% net participation interest in the block, and Groundstar Resources Ltd., the third member of the consortium will have a minority net participation interest of 6%. The Government will have a direct 20% interest which will be carried exclusively by the consortium. The remaining 20% is reserved by the Government to be assigned to a third party or parties within a period of eight months, with the requirement to pay back their share of petroleum costs incurred by the consortium.
The obligations under the PSC include a onetime signature bonus and initial capacity building bonus paid to the Government within a period of 30 days from the execution date of the contract. Annual contributions to personnel, training, environmental and technological funds established by the Government, as well as further community support contributions are to be paid over a period of 15 months to assist with infrastructure projects in the region. The consortium will also be responsible for paying its proportionate share of certain production bonuses in the case of commercial discovery. The remaining minimum work program obligation represents an exploration commitment, expected to commence in the near future, which includes the acquisition, processing and interpretation of a minimum of 300 kilometres of 2D seismic data and drilling of one well during the first exploration period. The Company expects to spend in excess of $40 million over the next 3 years on the block. During the next 90 days, the Company intends to evaluate its financing options to raise approximately $30 million, of which, it anticipates approximately $10 million will be spent on capital expenditures in 2008.
Mr. Stan Bharti, Chairman of the board of directors, commented “this transaction is a significant milestone for our company and its shareholders. We have been evaluating opportunities globally for Vast, and we are delighted to get involved in a Region with relatively low geological risk, reasonable commercial terms and clearly established transparent contractual model and legal framework. The Qara Dagh Block offers excellent potential for a major oil discovery, and it strongly positions the Company to pursue further opportunities in the region. We look forward to an aggressive exploration campaign.”
Preliminary geological studies including surface mapping and subsurface stratigraphical analysis have been initiated by the Company. An independent evaluator engaged by the Company has reviewed neighbouring oil and gas accumulations with recoverable reserves in the range of 30 – 600 million barrels oil equivalent based on previously released public information.
Mr. Edward Sampson, Chairman of Niko Resources Ltd., commented “we are very pleased to partner with Vast on this world-class opportunity.”
Conference Call
The Company will host a conference call to update shareholders on Wednesday May 21st, at 11:00 a.m. E.T. Messrs. Stan Bharti, Ahmed Said and General (ret’d) Jay Garner will moderate the call.
Date: Wednesday, May 21st Time: 11:00 a.m. E.T.
Local Callers: 416 - 695 - 6320 North American Callers: 1 - 888 - 818 - 4097
International Callers: +1 - 416 - 695 - 6320
Kurdistan Region
The Kurdistan Region is a semi-autonomous area located in the Federal Republic of Iraq, adjacent to Turkey, Iran and Syria. The KRG is a secular, democratically elected body that exercises executive power within the region. Due to historical political issues this area has had very limited petroleum exploration and exploitation, despite being located in a prolific basin with giant discoveries such as the Kirkuk Field.
Discovered Fields Map
The Kurdistan region passed its Oil & Gas Law in August 2007, and since then the KRG has signed contracts with various international oil companies including Addax Petroleum, OMV, MOL, Hunt Oil, KNOC (Korea), Perenco, Hillwood, Norbest (TNK Affiliate), Reliance Industries and others. For further information on the KRG, please visit www.krg.org
The Company requires TSX Venture Exchange approval in connection with its acquisition of its interest in the Block.
About Vast Exploration Inc.
Vast Exploration Inc. is an independent oil and gas exploration and production company actively pursuing crude oil and natural gas opportunities. Vast currently has production operations in the Province of Alberta, Canada.
For additional information, please contact:
Ahmed S. Said Stan Bharti
President and CEO Chairman
Tel: +1 (403) 263-3000 Tel: +1 (416) 861-5876
info@vastexploration.com
asaid@vastexploration.com
Regulatory Statements
This press release contains "forward looking information" within the meaning of applicable Canadian securities legislation. Forward looking information includes, but is not limited to, statements with respect to the future financial or operating performance of the Company, the prospective geology of the block, the terms of acquisition, the impact of the acquisition on Vast and receipt of all necessary approvals, including regulatory approvals, for the acquisition. Generally, forward looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, geopolitical and social uncertainties; the actual results of exploration activities; acquisition risks; regulatory risks; risks inherent in foreign operations; and other risks of the oil and gas industry. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
THE TSX VENTURE EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE
