19 November 2013
TANGIERS PETROLEUM LIMITED
Letter to Shareholders
On 8 October 2013, Tangiers Petroleum Limited (the Company) issued an
announcement advising the shareholders that it had terminated the Farm-Out
Agreement with CWH Resources Limited in relation to the offshore permits
WA-442-P and NT/P81 located in the Joseph Bonaparte Gulf, northern Australia
This letter is to provide background on the farm-out process and provide a
history of the Permits and their current status.
The Company commenced a search for a farm-in partner in April 2012 and
commissioned a well-regarded and experienced petroleum consultancy to manage
the process. 176 companies (both Australian and international) were identified,
contacted and followed up in the process. Although a number of companies
initially showed some interest and proposed minor contributions, many were
deterred by the magnitude of the work commitment of over $60 million in today's
costs, and the fact that the work completed to date had not yet confirmed
drilling opportunities. CWH Resources was the only company prepared to make a
significant contribution of $35 million to the outstanding mandatory work
History of the Permits
The Titleholders (the Company - 90%, and Ansbachall Pty Ltd -10%) applied for
the Permits in December 2009 and they were granted in early 2010 for a period
of six years. The first three years of the work program commitment (to April/
May 2013) is mandatory and comprises of:
Year One (ending April/May 2011) - Reprocessing of previously acquired seismic
Year Two (ending April/May 2012) - 3D seismic surveys in both permits.
Year Three (ending April/May 2013) - Two exploration wells (one in each
The work completed to date has been the reprocessing of previously acquired
seismic data and technical evaluation.
The Year Two and Year Three commitments are relatively significant, especially
for a junior company to take on at 90% equity. The failure to complete the Year
Two program by April/May 2012 placed the permits in jeopardy and there had
already been applications to government for extensions of time prior to the
Board changes in September 2012.
The current Board and staff of the Company have made every effort to deal with
the legacy of this significant work program commitment, but understandably the
government is running out of patience and clearly the Company itself cannot
fund the program at 90%.
Together with its joint venture partner, Ansbachall Pty Ltd, the Company has
applied to the government for a further extension of time for both permits to
allow us to try again to identify a company or companies willing to fund the 3D
seismic survey, which is expected to cost about $10 million. We are currently
awaiting a response from the government as to whether they are prepared to
grant any further extension.
We hope that this answers some of the questions and concerns that have been
raised by the shareholders regarding the Australian permits.
Tangiers Petroleum Limited
Level 2, 5 Ord Street
West Perth WA 6005, Australia
Ph: + 61 8 9485 0990
RFC Ambrian Limited (Nominated Adviser)
Mr Stuart Laing
+61 8 9480 2506
Peel Hunt LLP (Joint AIM Broker)
Mr Richard Crichton
Mr Andy Crossley
+ 44 20 7418 8900
Shore Capital Stockbrokers Ltd (Joint AIM Broker)
Mr Jerry Keen
Mr Bidhi Bhoma
+ 44 20 7408 4090
Mr Ed Portman (Media and Investor Relations - United Kingdom)
+44 20 7920 3150
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