Loyz Energy Ltd. has entered into two binding memorandums of understanding (MOUs) with Sun Petrochemicals Pvt Ltd. (a manufacturer of petroleum products) through its exploration and production division, Sun Oil & Natural Gas (SONG).
Under the first MOU, Loyz Energy will jointly bid for upstream projects together with SONG. In certain cases and subject to entry into definitive agreements, SONG will bear the costs and expenditures of Loyz Energy’s participating interest share of the joint project and will treat it as a carried working interest. In addition, once commercial production of hydrocarbons begins and there is net revenue accruing to the project, Loyz Energy shall be entitled to its carried participating interests share of revenue and will also be responsible for its share of future costs.
In the second MOU, Loyz Energy will transfer and assign its Indian assets – the production sharing contracts in respect of the Modhera and Baola fields, held under its 51.8%-owned Interlink Petroleum Ltd. (IPL) – to SONG. In turn, SONG will commit $1 million to utilize on the assets to complete the work program, lifting production and monetizing the reserves at the two fields.
Once certain requirements are satisfied, IPL will receive 7.5% of the monthly net profit earned, as well as 50% in cost recovery, of the assets. Subject to receipt of all requisite approvals, Loyz Energy expects to complete the transfer and assignment of the assets to SONG within two months from the date of the second MOU.