Nostra Terra’s JV with Independent Resources, Independent Resources (Egypt) Ltd. (IRE), reached an agreement with TransGlobe Energy concerning the early repayment of the $2.5 million loan note issued to TransGlobe in October 2015 and repayable on September 30, 2017.
IRE’s 50% interest in the East Ghazalat concession is not affected by this Agreement. Nostra Terra will pay $100,000 for its proportional share of the Agreement. The payment leaves Nostra Terra with a paid in full status, having no further debt on the asset.
As previously announced, IRE is Nostra Terra’s co-owned JV with Independent Resources. IRE owns a 100% interest in Sahara Resources (GOS) Inc, which owns a 50% non-operating interest in the concession, located in the Western Desert. The concession is operated by North Petroleum, a subsidiary of the Chinese state-owned ZhenHua Oil Co. Ltd. IRE acquired its stake in the concession from TransGlobe in October 2015 for $3.5 million, satisfied by the payment of $1 million in cash and the issue of the $2.5 million loan note to TransGlobe.
After recent negotiations, TransGlobe has agreed to accept the $200,000 payment from IRE as full and final settlement of the Loan Note with no further adjustments. IRE has agreed to release TransGlobe from any potential warranty and indemnity claims, which it may have had under the original sale and purchase agreement, and indemnifies TransGlobe in respect of any claims, which may arise from TransGlobe’s prior ownership of East Ghazalat.
In return TransGlobe has agreed to forgo the outstanding $2.3 million balance on the Loan Note and any claims for accrued interest since completion of the acquisition in October 2015. The agreement represents final completion of IRE’s acquisition of its 50% stake in the concession.
Matt Lofgran, CEO of Nostra Terra, commented: “We are pleased to have reached agreement on the outstanding loan note. It now allows IRE to focus our energies on improving operations in East Ghazalat.”