Key Capital acquires oil and gas E&P interests

Source:Key Capital Corporation

Key Capital has obtained a 65% interest in GeoGlobal Resources, Inc.

Key Capital Corporation (OTC Pink: KCPC) and GeoGlobal Resources, Inc. (“GeoGlobal”) (OTC Pink: GGLR) jointly advise that the relationship between the respective companies has been formalized whereby Key Capital has obtained a 65% interest in GeoGlobal, and Key Capital Directors Donald Benard and Peter Boonen, along with former UBS banker Christoph Wyder, have joined the GeoGlobal Board.

Despite its world class assets, GeoGlobal has experienced serious difficulties, especially over the last two years. In the past five months, Key Capital’s expert legal, accounting, project, and analytical executives have worked closely with GeoGlobal to address the prevailing issues in order to avoid a seemingly inevitable total corporate demise, despite its underlying assets value. As a result of an intensive collaboration over this period with GeoGlobal Executive Chairman and President Jean Paul Roy, the company’s Indian office executives and legal counsel, and the Key Capital executives, GeoGlobal’s position is rapidly stabilizing. GeoGlobal now seeks to re-positon itself as a significant emergent Oil & Gas Exploration and Production (“E&P”) company.

GeoGlobal’s core value E&P assets are the following:

A 10% (5% net) interest in the offshore Krishna Godavari Block (“KG”). Following expenditure of over US$2.8 billion by the partners to date, early pre-production of gas commenced last month at a reported 15MMcf per day with production expected to scale up to over 200MMcf within 3-4 years. In late 2009, when gas pricing economics was Management Committee approved at US$5.60 per MMBtu, the Gujarat State Petroleum Corporation Limited (“GSPC”), promoted by the State Government of Gujarat, and the field’s 80% partner and operator was reported to be selling down a 5% interest to Indian Banks and institutions for US$225 million. Final gas pricing per MMBtu is expected to exceed the economic pricing.

The KG Block of some 530.5 sq km is on the east coast of the state of Andhra Pradesh in South Eastern India in the Krishna-Godavari Basin, of which only 17 sq km in Deen Dayal West, and a 20.5 sq km area extension is under development, with gas production commenced from the field through submarine pipe into a major Indian distribution grid. The Krishna-Godavari Basin is credited with many of India’s recent significant oil and gas discoveries, and the KG Block holds promise for further discovery by GeoGlobal and its partners of significant oil condensate and gas within the greater Block area.

GeoGlobal has a 10% (5% net) Interest in the KG Block to be carried through to production. AIM listed Jubilant Energy holds a 10% Participating Interest, and GSPC, the Operator, holds the balance Participating Interest. To date, the consortium has drilled 13 exploratory wells (nine of which were successful discoveries), five appraisal wells and three completed development wells in the block.

Gaffney, Cline & Associates audited the Reserves & Resources for the Deen Dayal structural complex, and as of 31 May 2012, the gross 2P reserves of Gas and Condensates in Deen Dayal West have DOC approved 1,015 Bcf and 32.2 MMbbls, respectively. The GeoGlobal gross share of this phase is 101.5 Bcf for the current assessed recoverable gas. Additionally, 2C contingent resources of 3,693 Bcf of gas and 100 MMbbls of condensates are considered under the original development of the DDW and DDW extension areas. Only two to three wells are being put into initial production, and subsequently, an additional 12 production wells will be completed in the Deen Dayal West area.

The Declaration of Commerciality by the Indian Ministry of Petroleum and Natural Gas for six of the discovery wells (KG-16, KG-22, KG-31, KG-21, KG-19 and KG-20SS) in Block KG-OSN-2001/3 has considered 2C contingent resources to be 3,684 Bcf. A further 10 appraisal wells are proposed to be drilled to assess the potential of this resource in these areas.

Four Significant Blocks in the Cambay Basin – where in each case GSPC is the Operator and wherein production is commencing and to be expanded. These GeoGlobal partnered operations are within driving distance of Ahmadabad, and the region has road and rail access and all necessary infrastructure to support oil and gas project operations.
Tarapur 1: GeoGlobal has a 14% Participating interest in this smaller Tarapur Block of 2,397 acres which currently has 1P and 2P Net Reserves of 3.15 MMBOE (million barrels of oil equivalent), and it is a portion of an estimated gross OOIP (original oil in place) of 50 MMbbl. This Tarapur Block which is now in production from six discovery wells is forecast to generate over US$230 millionin revenue over just the next eight years following start up production of the remaining eight (Tarapur #6 and A1 to A7) appraisal wells (based on oil at US$90 per barrel).
Tarapur 2: GeoGlobal has a 20% Participating interest in the much larger highly prospective Tarapur RF (Ring Fence) Block of 297,515 acres. A recent engineering report estimated a target resource of between 1,000 MMboe and 4,000 MMboe prospective resource for the Tarapur RF Block.

Sanand/Miroli Block - GeoGlobal entered into this agreement in February 2004 under NELP-IV, which grants exploration rights in an area onshore in the Cambay Basin. GSPC is the Operator of this block and GeoGlobal has a 10% participating interest under this agreement. Of the discovery wells, three are production ready with some oil production commenced on the Miroli Block this year.
Ankleshwar Block - GeoGlobal entered into this agreement in September 2005 under NELP-V, which grants exploration rights in an area onshore in the Cambay Basin. GSPC is the Operator of this block and GeoGlobal has a 10% participating interest under this agreement. Of three discovery wells drilled to date, Ank-21 commenced oil and gas production in July, 2014.

Other Interests Include:

India: Deccan Syneclise Basin - GeoGlobal entered into this agreement in March 2007 under NELP-VI, which grants exploration rights in the DS 04 Block in an area onshore in the Deccan Syneclise Basin located in the northern portion of the State of Maharashtra in west central India. GeoGlobal is the Operator of this block and has a 100% participating interest under this agreement. GeoGlobal proposes to commence a 10 well drilling program on this Block during the course of the next 12 months.

Also in India, GeoGlobal is in Arbitration with OIL India Limited with regard to costs claimed by OIL India Limited that are vigorously disputed by the Company and in which proceeding GeoGlobal has filed its response, counterclaim and notice for damages with respect to three Indian licenses. The Company expects to be able to separately release further detail regarding this matter in the near term.

Israel: GeoGlobal currently has a 5% interest in two offshore blocks, Myra and Sara, in the Leviathan gas field of the Levantine Basin 70 km from the coast of Israel which were awarded in July 2008 and following an extension are current until July 2015. A new circa US$100 million well is proposed to be funded and spudded over the next 10 months. Each block is 400 sq km, and water depth is 1335 meters. A 3D seismic survey covering 1360 sq km was conducted in 2009. In 2012, Myra-1 / ST-1 and Sara-1 were drilled back to back in a total depth of 4,065 meters for Tamar / Leviathan sands and good sandstone reservoirs were found with Myra-ST1 being wet – no seal / trap, and Sara-1 wet – down-dip from Dalit-1 gas; fault seal failure.

Colombia: GeoGlobal has an entitlement to a 10% carried interest, and potentially a right to a further 40% working interest, in the highly promising Putumayo Blocks 6 and 7 in Colombia, totaling 708 sq km. GeoGlobal’s partner has purported to terminate GeoGlobal’s entitlement and rights which is vigorously disputed and is in process of being pursued.

As has been previously announced, Key Capital is still to raise a total of US$15 million to financially shore up GeoGlobal and is working with related party, Red Rock Assets LLC to raise funding through the lending platform where lenders are offered a 7.5% base interest together with a share in project profits. All loan funds through Red Rock assets are supported by a Capital Safeguard provided by the Company. Key Capital and GeoGlobal will also be presenting a business case to a number of industry parties.

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