Empire Energy Corporation INTERNATIONAL ("Empire") -
Further to the announcement made by Empire on 6 September 2011, TXO announces that it has now entered the following agreements with and related to Empire Energy Corporation International (Empire) (Pink Sheets: EEGC.pk - News) and its wholly owned subsidiary, Great South Land Minerals Limited (GSLM):
1) a convertible loan agreement under which TXO has made an initial payment of US$100,000 and whereby, subject to raising a further US$4.9m, TXO would have the right to fund the drilling program and operating expenses of Empire, with the call option, entirely at the Company's discretion, on conversion to acquire 49% of Empire's oil drilling licence in Tasmania, Australia. It is, however, TXO's intention that any such funding would be raised by Tasmania Oil and Gas Limited ("TOGL"), to which the option is in the process of being assigned, and in which TXO would have a minority interest. Therefore, TXO's participation in the loan agreement would be limited to the US$100,000 advanced to date. TOGL has also entered a Joint Venture and Management Agreement with GSLM which is for the drilling of Bellevue and Thunderbolt target oil sites in Tasmania, Australia.
2) a further convertible loan agreement, under which TXO has made an advance payment of US$50,000 and whereby, subject to TXO advancing a further US$250,000 to Empire and extinguishing up to approximately US$2,680,000 nominal of Empire's debts ("Debts"), TXO will effectively have the call option to acquire 19.9% of Empire's share capital. The cash funding of US$300,000 in aggregate will be used to cover Empire's short term operating expenses, with the remainder of the advances replacing the current Debts. As the exercise of this option will again be subject to material due diligence and the raising of additional funds there is no certainty at this stage that the option will be exercised. TXO has reached an agreement in principle to settle the Debts due to two lenders for US$160,000 and A$700,000 in cash respectively and US$320,000 in new Ordinary Shares in TXO in aggregate (to be issued at the market price). The aggregate total of the cash advances, the Debts cash settlement figures and the Debts TXO Ordinary Share settlements would amount to US$1,520,000 (GBP950,000). The loans provided to Empire under these arrangements are convertible as described above, are unsecured, non-interest bearing and if not converted repayable on 27th May and 22nd July 2012 respectively.
For TXO to advance any further funding under the arrangements set out above, it will be necessary for TXO to raise additional funding.
"We believe that Empire is an attractive exploration opportunity and we believe that the re-capitalisation of Empire will allow the company to drill its prospective targets in Tasmania which on success could add substantial value to TXO Plc." Tim Baldwin.
Trading in the Company's Ordinary Shares on AIM is expected to recommence with effect from 7.30am on Thursday 8th September 2011.
BACKGROUND TO TXO PLC
TXO completed a Rule 15 disposal of its Texas (US) based oil and gas assets ("TOGS") and business in May this year. TXO's shareholders also approved at that time the Company's proposed investing strategy together with a placing which raised approximately £1.1million to fund the new investing policy to focus on the hydrocarbon resource sector.
Following the disposal, on 30 June 2011 TXO completed the purchase of a £500,000 investment in the Grand Bahama Group Limited ("GBG").
BACKGROUND ON EMPIRE ENERGY CORPORATION INTERNATIONAL (EEGC.PK)
The information below is derived from information on Empire that is publically available on its website and other SEC filings. Empire is an oil and gas exploration company which is currently operating in Tasmania's central and northern basins. Empire holds an active Exploration License EL 14/2009 issued on 17th May 2010 to recommence drilling at the Bellevue site. The licence is valid until 17th May 2012 and is renewable for another 8 years after. For further information, please visit: http://www.empireenergy.com
Empire Energy Corporation International (Empire), through its wholly owned subsidiary Great South Land Minerals Limited (GSLM), has performed a significant amount of work including the discovery of previously unknown, very significant, potential petroleum structures within special exploration license SEL 13/98 (now EL 14/2009) over the past 10 years, proving the existence of three petroleum systems. Empire and GSLM have expended in excess of US$50 million of capital investment in Tasmania, meeting all its license conditions set by Mineral Resources Tasmania (MRT) for SEL 13/98. GSLM has obtained a valuation of the undiscovered potential resource identified by the exploration and evaluation work performed over the past 10 years on the exploration license in Tasmania, Australia.
London-based RPS Energy Limited (RPS), one of the world's leading independent experts on oil and gas resource/reserve evaluations, prepared a competent persons report indicating that the undiscovered prospective oil and gas resource contained within the structures identified by our geophysical, geological and seismic work was 668 million barrels undiscovered prospective resource.
GSLM and Empire intend to prove the validity of the RPS report and WHK valuations regarding the existence of commercial qualities of onshore oil and gas in the Tasmania basin by drilling the Bellevue and Thunderbolt exploration wells. This potential is contained within the structures identified by GSLM's 1,149 km of onshore seismic work which was based on the independent integration and interpretation by RPS of the gravity, magnetic, geologic and stratigraphic well information.
Empire's unaudited accounts for the year ended 31 December 2010 showed that Empire made a loss before taxation of A$9.4 million and had a negative Net Asset Value of A$12.8 million. From incorporation to 31 December 2010 Empire has spent approximately A$42.7million in connection with its licence.
For further information please call:
Tim Baldwin TXO Plc 0207 518 4300
Roland Cornish Beaumont Cornish Limited 0207 628 3396
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