Aminex (LON:AEX) told investors has reorganised its exposure to a recent discovery in Egypt.
The company had a 10% indirect interest in the West Esh el Mellahah-2 (WEEM-2) production sharing contract in Egypt via a 12.5% shareholding in Aminex Petroleum Egypt Ltd (APEL).
Now, it will convert that into a royalty over future production from the PSC.
It means that Aminex won’t have to contribute financially to the project during the development phase.
So far the group didn’t have to pay for exploration work, which was being undertaken as sole-risk by Aminex’s partner. But now that a discovery has been declared commercial, the company would have been required to contribute.
Aminex has now agreed to sell its shareholding in APEL to PetroSino for a nominal sum, and it will receive a 1% gross overriding royalty on the full sales value of its share of production from the PSC.
Royalties will begin once an initial US$2.5mln of earlier drilling costs have been recovered.
"The Board of Aminex is pleased with the result of today's reorganisation of its Egyptian interests which provides the best opportunity for the company to achieve revenues from the WEEM-2 concession, with no exposure to further development capital,” said Jay Bhattacherjee, Aminex chief executive.
Bhattacherjee, meanwhile, also told investors that good progress is being made in Tanzania in regards to concluding payment protection terms. He said that state firm Tanzania Petroleum Development Corporation has advised that a gas sales agreement can be concluded in the near future.
Such an agreement will clear the group to start gas sales soon afterwards, the Aminex boss added.