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Esrey Energy Ltd. along with its subsidiaries Telemu No 18 Ltd and LNG Energy (PNG) Ltd. have been notified by Heritage Oil Ltd. that Heritage will not be funding the drilling of the first exploration well on PPL 486 and therefore will not fulfill its final commitment under the Farm-in Agreement dated March 5th, 2013 and as Amended on May 30, 2014 and July 12, 2015.
Under the Farm-in Agreement Heritage now has the option to withdraw from PPL 486 and PRL 13 licenses or to retain a 40% participating interest in the Licenses.
Heritage has advised Esrey that Heritage wishes to retain a 40% participating interest and as a result will re-transfer the other 40% participating interest in the Licenses back to Esrey. In accordance with the Farm-in Agreement, Telemu and LNG Energy will assume operatorship of the Licenses.
The Company and Heritage are currently in discussions concerning the process and timing for the re-transfer of the participating interest in the Licenses and the transfer of operatorship. Upon the re-transfer, Esrey, through Telemu and LNG Energy, will hold a 50.55% net interest in PPL 486 and a 60% net interest in PRL 13.
David Nelson President and CEO said: "While we are disappointed at this turn of events, a significant amount of work on the Tuyuwopi oil prospect has further defined the target over the recent years. Esrey is preparing to resume its former role as operator and move quickly to secure the future of our interests in both PPL 486 and PRL 13."
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