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Rex to acquire South Erin Block

Tuesday, December 24, 2013

Caribbean Rex Ltd, a subsidiary of Singaporean company Rex International Holding will acquire a 100 per cent working interest in the South Erin Block, the company announced in a statement yesterday. Rex will also hold a 100 per cent working interest in Inniss-Trinity and 51 per cent working interest in the Cory Moruga block after completion of its drilling obligations, the statement said. Rex International Holding said it will invest up to US$4 million early in 2014. 



The company said “capital expenditure expected to be self-funding thereafter.” Rex said it will drill five to seven exploration and development wells in 2014, with first drilling in the first quarter of 2014. 



Rex International Holding Ltd, one of the largest companies listed on the Catalist of the Singapore Exchange, announced that Rex International Holding, has—through its 64.17 per cent-owned licence-holding company Caribbean Rex Ltd—signed a share sale agreement to acquire the remaining 25 per cent stake in Jasmin Oil and Gas Ltd from independent third parties. Jasmin holds 100 per cent of the South Erin Block licence in T&T.


The transaction is expected to be completed within the next 90 days. Upon the completion of the transaction, Caribbean Rex shall have a 100 per cent stake in Jasmin and hence, a 100 per cent working interest in the South Erin Block. 



The purchase consideration, which is immaterial to the Group, will be funded internally by Caribbean Rex. Caribbean Rex’s interests in the Incremental Production Service Contract in Inniss-Trinity remain at 100 per cent and in Cory Moruga at 20 per cent, which will increase to 51 per cent upon certain conditions for a drilling programme being met.


Dan Broström, executive chairman of Rex International Holding said: “In line with our prudent capital management strategy, the funding for the transaction is from the asset level. 



Rex International Holding intends to inject additionally up to US$4 million while Pareto Staur SPV1 AS, the other major shareholder of Caribbean Rex, intends to inject up to US$2 million into Caribbean Rex in early 2014, so that the three onshore concessions in T&T would become self-sufficient in terms of capital expenditure by the end of 2014. The South Erin block currently has a production average over the last three months of about 50 barrels of oil per day (bopd) from four shallow wells. 


With the increased 100 per cent working interest in South Erin Block—and under new tax legislation in T&T to be effective in January 2014—all revenue generated from this oil production can be 100 per cent offset against exploration expenses in Cory Moruga, the potential of which we have analysed using Rex Virtual Drilling and are very excited about.”


Broström added: 
“We plan to drill five to seven onshore wells in our three concessions in T&T next year, with the first drilling to be carried out in the first quarter of 2014. Our intention is to prove up the reserves and put the concessions into production. To unlock value for our shareholders, these assets may be sold and the capital recycled, or may be spun off into a separately listed entity in a few years’ time.”



Rex International Holding had on August 14, announced the signing of a term-sheet for access to the three onshore exploration and production (E&P) licences in T&T. 


On October 21, 2013, Rex International Holding announced that it would increase its stake in Caribbean Rex to 64.17 per cent from the initially stated stake of 51.99 per cent by paying a share consideration of US$3 million to Fram Exploration ASA, as part of a restructuring exercise in relation to Rex International Holding’s US concessions and onshore E&P opportunities in the T&T. The said shares were allotted and issued to Fram on November 15, 2013, Rex said in its statement.


Rex sees oil in the ground
Rex International Holding was listed on Singapore Exchange Securities Trading Limited’s Catalist Board on July 31. The oil exploration and production company has access to a set of proprietary and innovative exploration technologies, Rex Technologies, originating from the company’s Swedish founders.


These include “the game-changing Rex Virtual Drilling technology, the world’s first direct hydrocarbon detector using seismic data, which literally enables the group to “see oil in the ground” by pinpointing the location of oil reservoirs in the sub-surface. Through the exploration accuracy of Rex Technologies, which are applicable to both onshore and offshore oil exploration, the oil discovery success rate is significantly increased, the company said. 


The company also owns the unique Rexonic ultrasound technology which is used for well bore cleaning which allows for significantly increased oil production in wells that have issues with clogging and deposits. Rex International Holding holds rights to explore oil and gas in the Middle East, Norway, the US and T&T. 



These offshore and onshore concessions cover an aggregate area of more than 25,000 square kilometres in regions known for previous oil and gas discoveries. Located in politically stable countries with well-developed oil and gas infrastructures, Rex International Holding has a portfolio of assets that is geographically diversified and consists of a mix of both onshore and offshore concessions.


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