Renaissance Oil Corp. has entered into a binding letter agreement to acquire an option for a 50% working interest, in all rights from surface to basement, in a large Petroleum Licence, comprising 2.45 million acres in the Kavango sedimentary basin, in Botswana, Africa (the “Licence”).
Due to political and regulatory changes in Mexico, the Board of Directors of Renaissance has determined that until government policies become more favorable, it is in the best interest of shareholders for management to diversify the Company’s interests outside of Mexico. The Company will maintain its existing, high potential assets, within Mexico.
Pursuant to the Letter Agreement, a private company controlled by Mr. Steinke, CEO of Renaissance. has agreed to assign its interest in a farm-out option agreement with a subsidiary of Reconnaissance Energy Africa Ltd. (ReconAfrica), for C$100,000 cash and the issuance of 30 million common shares of the Company at a deemed price of $0.04 per share (using the 30 day volume weighted trading average) for an aggregate purchase price of C$1.3 million.
The Option Agreement will provide Renaissance with the option to acquire a 50% working interest in the Licence, exercisable at any time for up to a period of 36 months upon: (i) payment of C$1M, if exercised within 18 months, or C$1.5 M if exercised after 18 months; and (ii) the approval of the Botswana Department of Mines and Ministry of Mineral Resources, Green Technology and Energy Security.
“The option will provide Renaissance with an important and potentially high impact oil and gas play, through the opening of the Kavango basin, a previously unrecognized, deep sedimentary basin in northwestern Botswana and northeastern Namibia. Botswana is considered a stable, industry friendly jurisdiction which offers some of the most attractive fiscal terms worldwide. This low cost three year option provides excellent value for Renaissance shareholders,” said Ian Telfer, director of Renaissance.
The Botswana Petroleum Licence
The key terms of Licence are as follows:
- A 100% working interest in all petroleum rights from surface to basement covering 2.45 million acres in northwestern Botswana. The deep Kavango Basin offers both large scale conventional and non-conventional play types.
- An initial 4-year exploration period, with renewals up to an additional 10 years, in accordance with the Botswana Petroleum (Exploration and Production) Act.
- Upon declaration of commercial production, the licence holder(s) have the right to enter into a 25-year production licence with a 20-year renewal period, in accordance with the Botswana Petroleum (Exploration and Production) Act.
Royalties associated with the production licence will be subject to negotiation, in accordance with the Botswana Petroleum (Exploration and Production) Act, and generally range from 3 to 10% of gross revenue from production.
By the terms of the Licence the operator, ReconAfrica, is committed to a minimum work program of US$432,000 over the first 4-year exploration period.