Epsilon Energy has announced the sale of Epsilon Energy Yemen to an unrelated third party purchaser for US$100,000, pending government of Yemen approval. The agreement calls for Epsilon Energy International, the sole shareholder of Epsilon Yemen and a wholly-owned subsidiary of Epsilon, to receive 20% of proceeds from any subsequent sale of all or any part of the included 57.14% working interest in Block 41 or, in the event that commerciality is declared, 25% of the cost recovery pool monies received from the government of Yemen, in either case, the total amount not to exceed US$5,000,000.

Mr. Zoran Arandjelovic, Executive Chairman of Epsilon, stated, 'This transaction will enable us to transfer the operation of Epsilon Yemen to a trusted partner, while retaining an interest in the Company. This is a major step in executing our strategic plan. We have been working on strengthening our position in North America where we have our core assets. Now we will allocate our resources to where we can achieve the best returns for our shareholders.'

Background

The Block 41 Production Sharing Agreement was initially granted to Oil and Gas Mine Company (OGMC) in July 1998. The concession area covers approx. 5,600 sq kms (1,384,000 acres) and lies onshore along the Gulf of Alden to the west of the city of Mukalla. Since 1998, OGMC has drilled two exploratory wells (the Al Waya-1 and the West Mahrawa-1) drilled on Block 41, both of which are currently shut-in, and approx. 700 kms of 2D seismic has been shot over Block 41. 

On September 10 2007, Epsilon signed a Farm-In Agreement with OGMC, to acquire a 57.14% paying interest and a 50% undivided percentage interest in the Block 41 PSA. With the majority interest in the Block 41 PSA, Epsilon became operator.

Source: Epsilon Energy