Petromin, With the Completion of Its Acquisition of Terrawest Energy Corp., Partners With PetroChina on CBM Production Sharing Contract in China
Monday, 19 November 2007
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 19, 2007) - Petromin Resources Ltd. (the "Company") (TSX VENTURE:PTR) is pleased to announce that the Company and its nominee (Mega Investment Development Corp.) have successfully acquired 80% ownership of Terrawest Energy Corp. (Terrawest). Petromin and its nominee now hold a significant interest in a CBM Production Sharing Contract (PSC) in China's western Xinjiang Autonomous Region. The PSC executed with China United Coalbed Methane Corp. Ltd. (CUCBM), covers 655 sq km (253 sections) on a lease owned by PetroChina. It is the first-ever CBM Production Sharing Contract executed by a foreign party on a PetroChina lease.
The Production Sharing Contract (PSC) was approved in December 2005 with ownership of Terrawest (47%), CUCBM (5%), and PetroChina (48%). The PSC provides that gas production is to be sold at the fair market price, based on general pricing principles prevailing internationally, payable in US dollars.
To encourage the development and production of CBM, the Chinese Government has: 1) waived tax on CBM gas, 2) given CBM gas priority over conventional gas to pipeline access and 3) granted a subsidy of approximately $1.00 U.S. per Mcf for CBM gas over conventional gas pricing.
The PSC is located on the southern margin of the Junggar sedimentary basin, which is a productive petroleum and natural gas region considered highly prospective for CBM based on the extensive coal resources. There are a number of active coal mines in the southern sector of the Junggar basin.
There is an existing natural gas pipeline infrastructure in the vicinity of the Terrawest PSC that carries conventional natural gas to the nearby provincial capital city of Urumqi, and links the area to the major trans-national West-East pipeline. The Junggar Basin is targeted for further oil and natural gas pipeline development.
The preliminary estimate of CBM potential for the whole Junggar Basin, as reported by CUCBM, is 69 Tcf (approx 2 Trillion cubic meters).
Terrawest completed three (3) coal test wells in 2006, with depths ranging from 526m to 768m. The wells intersected the principal target Jurassic Xishanyao (J2x) formation as planned and aggregate coal seam thicknesses were found to be impressive, ranging from 16m to 43m. The two main J2x coal seams intersected in wells 06-01 and 06-03 are over 30m in total thickness. The J2x coal seams are well developed over much of the PSC area and are extensively mined by underground mining methods.
The deeper, Jurassic Badaowan (J1b) formation that is the secondary target on the PSC area was not drilled in 2006, and remains virtually unexplored. Elsewhere in the region it is of mineable thickness, and is exploited by underground mining. Estimated average coal tonnage in the area is around 50.7 million ton/section.
Test well drilling and coal-bed methane desorption analysis were completed under the project management of Norwest Corporation, an international CBM and energy consulting company based in Calgary, Alberta. Norwest concluded that the coal in the area tested is High Volatile Bituminous C to Subbituminous A in rank, with variable gas content ranging to 100 standard cubic feet (scf) per ton of coal. Initial gas resource estimates and production testing are expected to be confirmed during the next work program scheduled for early 2008.
Petromin acquired a forty percent interest in Terrawest by the acquisition of new shares from the treasury of Terrawest. The purchase funds will be used by Terrawest to further develop the PSC properties. The transaction was carried out at arm's length. No finder's fees were paid in connection with the acquisition.
Mr. Don Downing, the former President of Terrawest, has joined Petromin's technical advisory board, and will continue on as a director of Terrawest, with Kenny Chan, Ross Gorrell and Peter Ho joining the four-man board of directors. The new officers of Terrawest are Peter Ho, President and CEO, Mike Suk, Corporate Secretary, and Kenny Chan and Ross Gorrell, Co-Chairs of the Board. Don Downing brings a vast wealth of experience to Petromin, including being President of The Coal Association of Canada (1993-1998), and Vice President, Management Consulting of Norwest Corporation (1999-2006). Mr. Downing is a director of NRI Investments Ltd. and Fremont Gold Corp. and has held numerous energy industry board and advising positions.
On Behalf of the Board of Directors,
A Ross Gorrell, Co-Chairman and President
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