Transeuro Energy Corp. ("Transeuro", or the "Company") announces
it has entered into a Joint Venture Agreement ("JVA") with RAG
Rohol-Aufsuchungs Aktiengesellschaft ("RAG") to develop Transeuro´s
existing Ukrainian assets and Joint Activity Agreements with the local
Ukrainian state company "Crimgeologiya". The new Joint Venture will
also pursue additional business opportunities in Crimea.
RAG (www.rohoel.at) is a non listed Austrian stock company owned
by major Austrian and German energy and utility companies, principally
EVN, a leading Austrian energy, water and infrastructure company
(Vienna exchange symbol EVN) and E.ON Ruhrgas AG, a major European
integrated gas company (Frankfurt exchange symbol EOA.DE). RAG,
established in 1935, is the oldest E&P company in Austria, and
operates 51 gas fields and 40 oil fields including substantial gas
storage facilities. Annual gas sales volumes are around 1.1 billion
m3, with over 3 billion m3 of operational and projected working gas
storage.
Transeuro and RAG will be 50:50 partners in the new joint venture.
The JVA outlines substantial tangible benefits to Transeuro including
direct payments to Transeuro for past drilling costs, seismic costs
and inventory. And under various firm and conditional funding
formulas, RAG will provide its 50% investment share and contribute up
to an additional 25% of the drilling of three wells and the 3D seismic
over two fields (making RAG total contribution up to 75% of well and
seismic costs). In addition RAG will contribute to an agreed fund for
the acquisition of new licenses in Crimea and for field development.
The potential contribution by RAG to the total capital budget for 2008
and 2009 is up to US$70 million with Transeuro responsible for its
remaining share of well and seismic costs. Following success of the
Karlavksoye101 and Povotonoye 104 wells both RAG and Transeuro each
envisage investing around US$ 280 million into these two Crimea
fields.
Both Transeuro Energy and RAG believe there is a considerable
business opportunity in Ukraine from the Joint Activity Agreements
held with Crimgeologiya and that there is an opportunity for further
growth through the acquisition of additional discovered non producing
fields. The business environment in Ukraine and the domestic gas price
has strengthened considerably over the past two years and the
government has raised the emphasis on supporting domestic exploration
and production.
Under the terms of the JVA, Transeuro will reorganize all of its
existing Ukrainian assets such that they will all be held indirectly
by a wholly owned Dutch subsidiary of Transeuro. At the closing of the
transaction contemplated by the JVA, Transeuro will transfer 50% of
the shares of its Dutch subsidiary to RAG.
There are a number of conditions precedent to the closing of the
transaction contemplated by the JVA including, among other things, the
entering into by the parties of a Joint Management Agreement, the
approval of the Antimonopoly Committee of Ukraine and the completion
of the corporate restructuring of Transeuro and its Ukrainian assets.
The parties anticipate closing the transaction within 60 days.
Hal Hemmerich, President and Chief Executive Officer of Transeuro
commented, "We look forward to working with RAG to further the
development of our projects in Ukraine. RAG has considerable expertise
in exploration & production, gas marketing, distribution and storage
that will be of great benefit to the partnership. Together with RAG
being a financially strong company we can look at more projects"
Markus Mitteregger, Managing Director of RAG said, "The joint
activity with Transeuro in Ukraine is a further important step in our
international growth strategy. Ukraine is a country of prime
importance in the European energy context and we look forward to
develop resources for the Ukrainian market".
Transeuro Energy Corp. is involved in the acquisition of petroleum
and natural gas rights, the exploration for, and development and
production of crude oil, condensate and natural gas. The Company´s
properties are located in Canada, Armenia, Ukraine and, through
majority ownership in Eaglewood Energy Inc, in Papua New Guinea.
