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Enter Symbol
or Name
USA
CA



Canadian Overseas Petroleum Ltd
Symbol XOP
Shares Issued 284,016,939
Close 2013-03-07 C$ 0.23
Market Cap C$ 65,323,896
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Cdn Overseas reduces block LB-13 interest to 20%

2013-03-08 13:56 ET - News Release

Mr. Arthur Millholland reports

NOCAL APPROVES REVISED PRODUCTION SHARING CONTRACT FOR BLOCK LB-13 OFFSHORE LIBERIA; CANADIAN OVERSEAS PETROLEUM REVISES AGREEMENTS WITH PEPPERCOAST PETROLEUM AND EXXONMOBIL

Canadian Overseas Petroleum Ltd. and its wholly owned subsidiary, Canadian Overseas Petroleum Bermuda Ltd., have entered a restated and amended production sharing contract (PSC) for block LB-13 offshore Liberia with ExxonMobil Exploration and Production Liberia Ltd. and the National Oil Company of Liberia (NOCAL). The president of Liberia, Ellen Johnson Sirleaf, has approved and signed the appropriate paperwork related to the PSC so that it can be sent to the Liberian legislature for a ratification vote. The terms of the PSC will take effect once ratification has occurred and the PSC is enacted into law. Completion of the transactions contemplated is expected to occur shortly after ratification and remain subject to a number of conditions.

In addition, certain terms of the previously announced purchase agreements between COPL, COPL Bermuda and Peppercoast Petroleum PLC, and between COPL Bermuda and ExxonMobil have been amended. COPL Bermuda and ExxonMobil have amended the asset purchase agreement announced Nov. 16, 2011, such that COPL Bermuda will now have a 20-per-cent working interest in block LB-13 and ExxonMobil as operator will have an 80-per-cent working interest. ExxonMobil will continue to pay COPL Bermuda's working interest portion of drilling expenses for the first $120-million of gross drilling costs committed under the PSC and COPL Bermuda's share of joint venture costs up to the completion of those operations. As part of the new arrangements, the payment terms as between COPL Bermuda and Peppercoast have also changed from the agreement announced in May, 2011.

The new arrangements call for the completion of the acquisition of the original production sharing contract by COPL Bermuda to be financed by NOCAL, such that NOCAL shall pay the obligations of COPL Bermuda to Peppercoast. Following that transfer, the ExxonMobil affiliate will pay to NOCAL (1) all funds previously owed to COPL Bermuda under the asset purchase agreement, and (2) on behalf of COPL Bermuda and the ExxonMobil affiliate, all amounts owed by COPL Bermuda and the ExxonMobil affiliate to the government of Liberia on account of the issuance of the PSC. Upon that payment, the PSC shall be owned 20 per cent by COPL Bermuda and 80 per cent by the ExxonMobil affiliate. All payments will follow the approval by the legislature of the Republic of Liberia of these arrangements to assure transparency and compliance with law.

As a result of these changes, COPL will no longer issue any shares to Peppercoast to complete the transaction. Further, other than legal costs, usual closing costs and continuing fees under the PSC, COPL and COPL Bermuda will have no net cash outlay or cost in connection with the closings other than forgiveness of accounts receivable related to the $15-million 3-D seismic licence fee owing by Peppercoast to COPL, and other intercompany amounts and $7-million of fees payable to the government of Liberia.

Arthur Millholland, president and chief executive officer of COPL, commented: "We are very pleased to have been able to reach agreement with representatives from the government of Liberia, Nocal and ExxonMobil for an amended PSC for block LB-13, and believe that this represents a great opportunity for our shareholders and the citizens of Liberia. The revised sale and purchase agreement with Peppercoast, and the revised asset purchase agreement with ExxonMobil provide a low-risk method for our involvement in block LB-13. We look forward to working with ExxonMobil to begin planning exploration activities offshore Liberia."

We seek Safe Harbor.

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