Sunshine announces definitive joint operating agreement for Muskwa and Godin areas
Calgary, Alberta (October 20, 2013) and Hong Kong (October 21, 2013) – Sunshine Oilsands Ltd. (”Sunshine” or the “Corporation”) (HKEX: 2012, TSX: SUO) is pleased to announce that it has signed its previously announced joint operating agreement (“JOA”) with Renergy Petroleum (Canada) Co., Ltd., (“Renergy”) an affiliate of Changjiang Investment Group Co., Ltd. (“Changjiang”) with respect to the Corporation’s Muskwa and Godin area oil sands leases (“Leases”). Excluded from the JOA are all of Sunshine’s oil sands rights within the carbonate formations contained within the Leases.
Renergy will operate the assets under the JOA as the Operator. In return for a 50% working interest, Renergy has agreed to fund 100% of the initial joint operations conducted on the lands up to a maximum of CAD $250 million (the “Commitment Cap”), which funding shall be deployed at the discretion of Renergy, as Operator, until the earlier of the point when (i) the sum contributed equals the Commitment Cap or (ii) average daily production from the lands over any 20 consecutive days period equals or exceeds 5,000 barrels per day (the “Production Target”).
The working interest transfer is not expected to result in any accounting gain or loss due to the accounting treatment of the transaction.
The JOA sets an outside date (the “Outside Date”) where the first planned phase of discrete operations (“Phase One”) shall be deemed to end if either the Commitment Cap has not been reached or the Production Target has not been achieved, which date is the earlier of: (i) three years from receipt of all required regulatory approvals in respect of Phase One; and (ii) six years from the date of the JOA; as may be extended by events of force majeure.
In the event that the Commitment Cap or Production Target is not reached by the Outside Date, Renergy’s working interest shall be reduced to that percentage obtained by multiplyin