Persian Gold plans reverse takeover of Hydrocarbon Exploration

Persian Gold (LON:PNG) is set to expand its asset base with increased diversity in terms of both its resource base and its geographic setting. The company has agreed the terms of a reverse-takeover of un-listed Hydrocarbon Exploration (HyEx), increasing its existing stake in a Ghanaian oil concession and adding interests in Bolivia and the United States.

"This is a good proposal for both companies and I strongly support it”, Persian Gold chairman John Teeling commented. “HyEx gets a stock exchange listing which gives liquidity to its shareholders and Persian Gold expands its oil and gas portfolio.  The increased scale will make the combined venture more acceptable to investors."

Under the terms of the deal, Persian Gold has offered to acquire all the outstanding shares of HyEx through a share based deal worth approximately £4.3 million – with 2,500 new Persian shares being issued for every HyEx share held.

Subsequently, Persian Gold will own 100% of HyEx. It is proposed that the new company will be renamed Clontarf Energy Plc. Furthermore, Persian Gold intends to carry-out a separate placing of new shares to raise sufficient working capital for the enlarged group.

HyEx consists of the de-merged Bolivian, Ghanaian and American oil and gas assets of Pan Andean Resources, which was acquired by Petrominerales (TSX: PMG) earlier this year. Through its deal with Pan Andean, Petrominerales acquired the company’s Columbian and Peruvian assets, and the remaining assets were de-merged into the newly formed and un-listed HyEx.

Four of Persian Gold’s directors are also directors and/or shareholders of HyEx.

HyEx has exploration interests in Bolivia and Ghana and royalty income and licences over producing assets in the US. In Ghana, HyEx is a participant in an oil exploration concession, alongside Persian Gold, with a 30% stake. On the 15th April, the gold company reported the successful conclusion of a two-year negotiation, through a consortium, to secure an interest in the concession. Persian also owns a 30% interest in the Ghana concession.

Meanwhile, in Bolivia, HyEx has a 10% stake in the El Dorado gas field, which has reserves of over 1 trillion cubic feet. Previously, El Dorado was a BP/Pan Andean joint venture, now the BP stake is now owned by Chaco - the Bolivian state oil company. Chaco is currently producing 20 million cubic feet of gas a day from two wells on the block.

Also, in Central Bolivia, HyEx holds a 30% interest in the Monteagudo gas/oil field, along with partners Repsol (50%), Petrobras (20%). According to Persian, there is declining production from a number of shallow gas wells at Monteagudo, as well as a significant deep gas play.

In the United States, HyEx receives income from interests in the Gulf of Mexico - with royalty interests and a 63% working interest in Block High Island 52 and 63% working interest  in Block High Island 30L – along with small royalties from onshore holdings.

Oil production from these US-based assets is declining, and is expected to be negligible within two years. Also the company noted that there is a claim against HyEx for circa US$4 million, from Hunt Oil, which operates High Island 30. The claim is disputed.

Currently, in Iran, Persian Gold has two outstanding applications for Discovery Certificates - one on the Chah-e-Zard gold deposit in Central Iran and the other on the Dalli copper/gold porphyry deposit near Isfahan, with both projects optioned from local Iranian licence holders.

In April 2010, the company told investors that it has been looking at projects elsewhere, while awaiting the Iranian approvals. In addition to its stake in the Ghanaian oil concession, Persian also highlighting a potential Lithium play in Bolivia. Back in September 2009, the company initially raised the possibility of a switch to oil and gas.