16/01/2009 - 11:28

Target Energy down on project withdrawal

16/01/2009 - 11:28

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Shares in Balcatta-based Target Energy have fallen as the company withdraws from two gas joint ventures in the United States which is expected to save them over $2.5 million.

Target Energy down on project withdrawal

Shares in Balcatta-based Target Energy have fallen as the company withdraws from two gas joint ventures in the United States which is expected to save them over $2.5 million.

The company said it exercised its right to withdraw from participation agreements over the Catapult 3 and Parks North projects due to delays and ongoing uncertainty over the start of the drilling project.

"Target has been ready and willing to drill these prospects for some time now, however we have been unable to secure a firm drilling timetable from the Operators and it remains unclear if or when drilling will commence," managing director Laurence Roe said.

Shares in the company dropped 22.5 per cent to 3.1 cents at 13:30 AEDT.

The company said it will be reimbursed around $US290,000 ($A432,100) and free up a further $US1.75 million ($A2.6 million) of funds which were allocated to the projects.

Target said it will invest the funds into new oil and gas ventures.

 

 

 

The announcement is below:

 

 

Target Energy Limited (ASX Code: TEX) ("Target") advises that it has withdrawn from Participation Agreements covering the Catapult 3 and Parks North prospects due to lengthy ongoing delays and uncertainty over the commencement of drilling and the capacity of other project partners to secure requisite funding to drill these projects.

Managing Director Laurence Roe said, "Target has been ready and willing to drill these prospects for some time now, however we have been unable to secure a firm drilling timetable from the Operators and it remains unclear if or when drilling will commence. Target considered the lack of certainty over the drilling schedule and project financing to be unacceptable and under the terms of the Participation Agreements, exercised its right to withdraw without penalty and receive a full refund for all its expenses incurred on both projects. This will repatriate around US$290,000 back to the Company and free up a further US$1.75 million of funds presently allocated to these projects.

"By formally withdrawing from Catapult 3 and Parks North, Target will recoup all of it's investment in these prospects and we intend to redeploy our cash into new oil and gas exploration and production projects that have a better likelihood of proceeding in the short to medium term. It will also allow us to take advantage of opportunities to acquire interests in new projects that may result from the sale of assets in the U.S."

Mr. Roe added, "Target will continue to actively explore for and develop oil and gas production projects in the U.S., and we believe that the economic conditions in the U.S. will create opportunities for us to acquire interests in quality projects that we simply could not afford if we'd drilled Catapult 3 and Parks North. Withdrawing from these projects allows us to preserve our funds at a time when cash is at a premium, and position ourselves for further growth at a time when many other US explorers and producers are being forced to sell their assets."

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