Monday, 5 December 2011

Gas Subsidiary Armour Energy to Acquire Strategic Stake in Lakes Oil

Farm-in Program on Highly Prospective Onshore Gippsland and Otway Tenements

The Board of Directors of DGR Global (ASX:DGR) is extremely pleased to announce details of a share placement and a farm-in agreement entered into between its gas subsidiary Armour Energy and the ASX listed Lakes Oil NL (ASX:LKO).

Under the agreement Armour Energy will subscribe $2.25 million to purchase 900 million shares in Lakes Oil at 0.25 cents per share in Lakes representing a 15% interest in the Company. Armour Energy will also be granted a right to maintain its 15% interest in Lakes Oil through participation in any subsequent capital raisings by Lakes Oil.

In addition two Armour Energy Directors, Executive Chairman Mr Nicholas Mather and CEO Mr Phil McNamara (or other nominee) of Armour, will be appointed to the Lakes Oil Board of Directors.

Lakes Oil has agreed to provide Armour Energy with farm-in rights and acquisition options over certain of its assets subject to the completion of satisfactory due diligence by Armour Energy, as follows:

• Right to earn 51% and assume operatorship of PEP169 in the Otway Basin in south western Victoria by drilling the Moreys Prospect with a $2.5 million well targeting a P50 recoverable prospective resource of 46BCF gas in the Waarre Sandstone. The Moreys Prospect is adjacent to numerous gasfields operated by Origin Energy and proximal to existing pipeline infrastructure.

• Right to earn a 51% interest in PEP166 within the onshore Gippsland Basin with a total expenditure of $9 million across two years targeting large unconventional gas reserves.

• An option to acquire half of Lakes Oil�s interest in the Trifon and Gangell blocks within PRL2 and a 25% interest in the balance of PRL 2 at any time in the next three years in consideration of payment of $30 million. Option fees will also be paid of $100,000 on signing, $200,000 after year 1 and$300,000 after year 2.

To view the rest of the announcement, please click here. 

Yours,

DGR Global