(Alliance News) - TomCo Energy PLC shares rose on Thursday as it said that its subsidiary received approval to start drilling exploration wells at the Tar Sands Holdings II LL site in Utah and expects drilling to start in March.
Shares were up 3.1% at 0.63 pence each on Thursday afternoon in London.
The London-based energy company with operations in the US said permits required from the Utah Division of Oil, Gas & Mining to drill three exploration wells on the Tar Sands Holdings II LL site were received by AC Oil LLC.
AC Oil LLC is a wholly-owned subsidiary of Greenfield Energy LLC. Moreover, Greenfield is a subsidiary of TomCo and owns a 10% membership interest in the TSHII site. The subsidiary also has an exclusive option to acquire the remaining 90% of membership interests for an additional cash consideration up to December 31.
The drilling of the exploration wheel is scheduled for early March, the company noted.
Additionally, TSHII entered into a 10-year lease with an unnamed tenant, starting March 1.
The lease will cover a refinery on the TSHII site that is not required for Greenfield's plans and was previously scheduled to be demolished should Greenfield acquire all of TSHII.
The tenant plans to develop a refinery on the site, producing 10,000 barrels of oil per day, TomCo continued.
Under the terms of the lease, it has two years in which it can do so without potentially forfeiting the lease.
Furthermore, the lease will require the tenant to pay rent of USD10,000 per month, with a further USD3 production rent on every barrel of produced hydrocarbons.
In late January, TomCo raised GBP1.3 million gross in a share placement to fund Greenfield's operations at the site.
"We continue to make significant progress with our plans for the TSHII site and we look forward to the drilling of the exploration wells in March, utilising some of the proceeds from our recently completed placing," Chief Executive John Potter commented.
He added: "In parallel, we are progressing the previously announced due diligence exercise being undertaken by a financing party currently interested in backing our plans for Greenfield, together with other matters in relation to the TSHII site. We look forward to providing further updates in due course."
By Abby Amoakuh; abbyamoakuh@alliancenews.com
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Tomco Energy (TOM)