LONDON (Alliance News) - Red Emperor Resources NL Monday said it is in advanced talks with a number of projects as more opportunities become available due to the fall in the price of oil.
In a statement, Red Emperor said its current cash position is in excess of AUD10 million, roughly GBP5.2 million, following the sale of its direct equity investment in Highfield Resources Ltd for AUD798,279 after brokerage costs, representing a 66% return on its AUD480,000 investment.
Managing Director Greg Bandy said the company is seeing "more realistic farm-in terms" offered and lower industry costs.
"With a strong balance sheet and low cash burn the company is in a strong position to exploit these opportunities, which would have been unobtainable just six months ago. In that regard, we are excited by the outlook for the company," Bandy said in a statement.
In addition, Red Emperor said its joint venture is continuing to significantly reduce its presence in Bosaso, Puntland "and will refrain from any operational activity and associated expenditures pending a resolution of the political situation between the Regional Government of Puntland and the Federal Government of Somalia regarding the legitimacy of oil concession contracts".
The joint venture has asked for a two-year extension to the current exploration period from the Government of Puntland to allow time for the "political challenges" to be resolved.
"Red Emperor is optimistic that agreements can be reached to enable the JV to remain in control its two PSCs that provide both exposure and leverage to potentially multiple billion barrels of oil," the company said.
In Georgia, Red Emperor said that Strait Oil & Gas has advised that it has agreed a drilling programme with the Georgian Oil & Gas Ministry over the well obligation that exists on Block VIb under a production sharing contract.
The Ministry has confirmed that a valid drilling license is in place, the company added.
"All technical aspects of the well, along with the cost budget, have been approved with a drill rig and all required services on standby. Range Resources remain in negotiations with a third party to reduce their financial exposure associated with the proposed well and Red Emperor continues to monitor the progress of these discussions," Red Emperor said.
Red Emperor shares were up 47% at 2.05 pence on Monday morning.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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