Taipan Resources Inc. Shareholder's Letter and Operational
Taipan Resources Inc. Shareholder's Letter and Operational Update From CEO Maxwell Birley
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 11/12/12 -- Taipan Resources Inc. ("Taipan" or the "Company") (TSX VENTURE:TPN) is pleased to provide the shareholder's letter and operational update below from CEO Max Birley.
Since closing Taipan's first major round of financing ($11.5 million) and the amalgamation with Lion Petroleum in July, we have worked steadily to move the company and its assets in Kenya forward. As the fourth largest gross acreage holder in Kenya we have been quite busy. Below, I enclose a brief summary of what has been happening in the Kenyan oil industry and an update of our operational activities in the country.
In order to facilitate the exploration and development of our two Blocks in Kenya, I have moved my home and family to Nairobi. Relative to other frontier markets in which I have lived, worked and discovered hydrocarbons, Kenya is an easy and friendly place to conduct business. It is also a very exciting time in the Kenyan oil business with very high levels of both commercial and drilling activity post the first major oil discovery in Kenya in March. Kenya is now widely regarded in the industry as the "hottest" place for onshore oil exploration.
Taipan Resources has also engaged two key senior Kenyan nationals to provide the essential local experience and input to operational decisions. This includes Mr Daniel Ngenoh, a geophysicist who was previously the head of the Kenyan National Oil Company and Mr. Hari Ndugu, who is now overseeing Community Relations for the upcoming seismic survey on Block 2B. Both individuals are highly experienced in Kenya and have previous experience with our Blocks. Mr. Daniel Ngenoh has undertaken a significant amount of technical work on Block 1 and Block 2B, while Mr Hari Ndugu worked for many years with the Ministry of Environment and has undertaken many site visits to the Block 2B area.
As you are likely aware, in March Tullow Oil and Africa Oil announced that they had discovered oil in the Tertiary sandstones in the Ngamia-1 well. This well has created tremendous interest in Kenya since the announcement. As a follow on, Tullow are currently drilling a similar Tertiary exploration target to the north of the Ngamia well named Twiga South-1. Although the well is not expected to reach its total depth until later this month, Tullow distributed a press release on the 31st October 2012 declaring that oil has been encountered in the well. Clearly this will continue to generate much interest and excitement as Tullow and its partner Africa Oil share further results later this month on this promising new discovery.
The Tertiary oil discoveries that have been made by Tullow and Africa Oil are highly relevant to the exploration efforts of Taipan, as we have more than 3,150 metres of the same age and type of rocks occurring on Block 2B where we hold a 100% interest.
Tullow also recently commenced the drilling of the Pai Pai exploration well. The well will be drilled to reach total depth at around 4,112 meters and is expected to test Cretaceous and Jurassic objectives.
While our primary objective on Block 2B is oil in the Tertiary, the Pai Pai well is on-trend with additional Cretaceous and Jurassic plays that also exist on Taipan's Block 2B. The results of the Pai Pai well are expected towards the end of the year.
Contiguous to Taipan's Block 2B, on Block 9 Africa Oil and Marathon Oil plan to drill the Kinyonga Prospect, with Tertiary and Cretaceous targets, in the second half of 2013. This is a large prospect with a Gross Oil Prospective Resources (unrisked) Best Estimate of 320 mmbbls. Based on gravity, magnetic, and seismic data we can see that the Tertiary trend on Block 9 extends into Block 2B and we believe that the "sweet spot" of the basin is located on our block.
TAIPAN RESOURCES OPERATIONAL UPDATE
Block 2B is currently 100% owned by Taipan's wholly owned subsidiary Lion Petroleum. Block 2B is 7,800 km2, which is equivalent to 1.9 million acres. We are currently in the Initial Exploration Period of the Production Sharing Contract (PSC) which ends on the 1st June 2013. We have the option to extend the exploration term of the PSC for a further 2 periods of 2 years (total of 4 years). The work program and expenditure up until the 1st June 2013 includes the acquisition of 400 kilometers of seismic data and the acquisition of a block wide Full Tensor Gradiometry survey (FTG).
We expect to begin the acquisition of 400 kilometers of seismic data for Block 2B in December of this year and early in 2013 we will also acquire the FTG survey. The total expenditure for the work program up to the 1st June 2103 will be $6.5 million. Concurrent with the interpretation of the seismic and FTG data, we expect to begin our well planning and design work and expect to drill an exploration well on Block 2B in the second half of 2013.
We have also now completed an in-depth technical review of Block 2B which has exceeded our original expectations. Management believes that the resource estimates previously prepared by independent petroleum consultants Sproule for Block 2B are conservative. We expect to provide an update to our resource estimates in the first half of next year after the seismic and gravity work has been integrated. It should also be noted that the current resource estimates for Block 2B were prepared prior to the oil discoveries that have occurred this year in Kenya.
During the month of October we arranged a 20 day site visit to Block 2B to meet senior government officials and tribal elders to begin the process of pre-survey community awareness. Two public meetings were held to explain the work that will be undertaken and to take onboard the concerns of the local community. Further sensitization meetings will take place before the seismic survey commences.
TAIPAN RESOURCES COMMERCIAL UPDATE
In September we commenced a farmout process for Taipan's wholly-owned Block 2B. The aim is to bring in a partner that will be expected to add technical input to the work on the block in addition to carrying our costs through the exploration work program. We are currently engaged in various levels of discussion with a number of potential farm-in partners. We plan to farm out up to 50% of our interest in the block and expect the farm-out process to be concluded by the end of this year.
We have also been encouraged by the high level of recent commercial activity in both Kenya and the surrounding region, and in particular by the farm-in on Block 9 which is contiguous to Taipan's Block 2B. Commercial activity has included the Marathon farm-in into Africa Oil's interests in Blocks 9 (50%) and 12A (15%) for $57 million that closed in October, and the purchase from Agriterra also by Marathon of its 20% interest in the South Omo Block in Ethiopia for a total of $50 million also in October. In addition, in September Bowleven farmed into Adamantines' Block 11B to acquire a 50% interest for funding the next $10 million of seismic work. All of this activity demonstrates the sizable interest in the Kenyan hydrocarbon arena.
Investor communication is very important to the Taipan Board and Management Team. In order to educate investors of the attractiveness of Taipan's acreage position and to clarify the upcoming work program and expected farm-out, throughout October we held more than 50 investor and analyst meetings across the UK, Ireland, Canada and the USA.
We will continue to keep you updated on our progress and also suggest you visit Taipan's recently refurbished website (www.taipanresources.com) for news on developments with the Company and throughout east Africa.
Finally, we wish to thank you for the confidence you have entrusted in the Taipan Board and Management Team, and assure you of our commitment to building sustainable shareholder value.
Maxwell Birley, Chief Executive Officer
About Taipan Resources Inc.
Taipan Resources Inc. (TSX VENTURE:TPN) is an independent Africa oil and gas exploration company with interests in 9.7 million gross oil and gas exploration acres (39,588 km2) in Block 1 and Block 2B onshore Kenya. Through its wholly owned subsidiary Lion Petroleum Corp., Taipan currently holds a 100% working interest in Block 2B (1.9 million acres / 7,807 km2) and a 20% working interest in Block 1 (7.8 million acres gross / 31,781 km2) which is operated by Afren plc. Taipan's total mean net unrisked prospective resources on the Blocks are estimated to be 530 million barrels of oil equivalent. Taipan is traded on the TSX Venture Exchange with the symbol TPN.
The statements contained in this release that are not historical facts are forward-looking statements, which involve risks and uncertainties that could cause actual results to differ materially from the targeted results. The Company relies upon litigation protection for forward looking statements.
This news release contains forward-looking statements relating to the timing and completion of a farm out for Block 2B, the timing and completion of exploration programs on Block 1 and Block 2B, the future operations of Taipan and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "will", "may", "should", "anticipate", "expects" and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding the completion of a farm out for Block 2B and the completion of exploration programs on Block 1 and Block 2B, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Taipan's expectations are risks detailed from time to time in the filings made by Taipan with securities regulations.
The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Taipan. As a result, Taipan cannot guarantee that any forward-looking statement will materialize and the reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and Taipan will only update or revise publicly any of the included forward-looking statements as expressly required by Canadian securities law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Contacts: Taipan Resources Inc. Joel Dumaresq Director (604) 336 3193 firstname.lastname@example.org www.taipanresources.com
For Investor Relations Contact: Kin Communications Inc. 604-684-6730 or 1-866-684-6730 TPN@kincommunications.com www.kincommunications.com