“The acquisition provides Greenfield with a base from which to accelerate its plans,” said TomCo chief executive John Potter.
The company, in a statement, said it exercised its option for TSHII and has acquired the 10% interest for a US$2mln cash consideration, of which US$500,000 was paid by crediting deposits paid previously. It retains an exclusive option to acquire the remaining 90% of the property.
Additionally, Greenfield has been granted a lease over 320 acres of a 760-acre site owned by TSHII, for a nominal consideration, and an annual rent of US$320 plus a 12% royalty on conventional barrels of oil, gas and sulphur produced and removed from the lease area. It opens up a project to quickly establish revenue-generating conventional oil production.
“The acquisition provides Greenfield with a base from which to accelerate its plans to pursue both the drilling of certain near term oil production wells and thereafter the acquisition of the balancing 90% of the membership interests and its first commercial-scale plant, subject to funding,” said John Potter, TomCo chief executive.
“We expect the permitting process for the production wells to be completed in Q1 2022, following the drilling of three exploration wells intended to occur in December 2021.”
“Greenfield is currently focused on commercial negotiations with third parties in order to seek to secure the funding for its future plans, together with progressing the required permitting and other preparatory work. We look forward to providing further updates in due course.”
TomCo funded the initial TSHII transaction with the backing of a new unsecured US$1.5 million loan from Valkor Oil & Gas LLC, formerly a stakeholder in Greenfield and a funding partner to TomCo.
The US$1.5mln is to be repaid by the end of May 2022, and, that could come by Greenfield granting Valkor a share of potential net production revenues.
In the meantime, TomCo said Greenfield is engaged in ongoing discussions regarding funding options to potentially achieve the ultimate acquisition of 100% of the TSHII assets, along with a programme of well drilling to establish the first phase of the planned plant to produce up to 5,000 barrels per day.
The plans for Utah plant follow a successful pilot operation completed earlier this year.
Read More: TomCo Energy Plc’s Greenfield acquires first stake in Utah land package