American oil production company TomCo energy announced on Wednesday that its 50-50 joint venture with Valkor, Greenfield Energy, Endeavor Capital Group and Tar Sands Holdings II (TSHII) has reached an agreement for the possible acquisition of up to 100% of the ownership and membership rights and shares in TSHII.
The AIM-traded company said TSHII owns approximately 760 acres of land and certain non-manufacturing assets in Uintah County, Utah.
Greenfield planned, subject to completion of due diligence and securing of funding, the site for future oil sands mining and construction of a commercial processing plant using the findings of the Front-End Engineering and Design (FEED) study, upon completion and more independently Review of the procedure.
TomCo said Greenfield will also leverage other knowledge and experience from operating Petroteq Energy’s existing oil sands facility in Asphalt Ridge, Utah.
The site had existing infrastructure, facilities and equipment, as well as an existing major mine permit, which could facilitate any future development through Greenfield.
Under the terms of the agreement, Greenfield paid a non-refundable down payment of US $ 0.2 million (£ 0.14 million) to allow 90 days to complete due diligence and an exclusive option for up to 120 days To secure initial acquisition of 10% of the membership shares.
Greenfield could exercise its right by September 1 to initially acquire 10% of the shares for a cash payment of USD 2 million, against which the deposit will be used.
Upon completion of the acquisition of the first 10%, Greenfield would then have an exclusive option to purchase the remaining 90% of the shares in its sole discretion for additional cash of $ 15.25 million if acquired on or before December 31st , or $ 16.25m if purchased between January 1 and December 31, 2022.
Greenfield had the right to unilaterally terminate the agreement at any time during the first 120 days after execution, except for the forfeiture of the $ 0.2 million upfront payment.
The agreement also contained certain commercial and other representations and warranties between the parties that are customary for such a transaction, TomCo said.
She warned that there could be no certainty that Greenfield’s due diligence would be satisfactory or that the necessary funding could be secured to complete a 100% acquisition.
“I am pleased that Greenfield has secured the right to purchase suitable land through TSHII for the potential construction of its first commercial facility, subject to funding,” said John Potter, TomCo’s chief executive officer.
“The location has the key attributes that our joint venture has been looking for and Greenfield will shortly begin a detailed due diligence while driving discussions with potential donors.
“In the meantime, the Asphalt Ridge operation continues to produce salable oil and sand and we look forward to providing further updates in due course as matters progress.”
At 1028 BST, TomCo Energy’s shares fell 4.81% to 0.76 pence.
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