19 March 2020
TOMCO ENERGY PLC
("TomCo" or the "Company")
Valkor JV and TurboShale Update
TomCo Energy plc (AIM: TOM), the oil shale exploration, development and technology group focused on using innovative technology to unlock unconventional hydrocarbon resources, announces that, further to its announcement of 4 December 2019, it has entered into a binding exclusivity agreement ("Exclusivity Agreement") with Valkor Technology LLC ("Valkor"), under which the parties have agreed an exclusivity period up to 30 June 2020 ("Exclusivity Period") to negotiate a legally binding agreement which will set out how the parties will explore the oil sands potential across TomCo's leases and nearby leases. During the Exclusivity Period, the parties will undertake a Pre-FEED study.
Valkor Joint Venture
On 4 December 2019 the Company announced the signing of a non-binding memorandum of understanding ("MoU") with Valkor to explore the oil sands potential across the Group's oil shale leases within the Uintah Basin, Utah, USA ("Leases"). Valkor is an international Engineering, Procurement, Construction and Installation and field operations company, with operations in the US, South America and Africa both on and offshore and the owner and operator of gas and oil fields in Trinidad, USA, Turkey and the Ukraine. Through their subsidiary, Valkor Energy Services, they have assisted with the design improvements of Petroteq Energy Inc's ("Petroteq") closed loop system for use in the recovery of oil from oil sands (the "Oil Sands Technology") and has a licence from Petroteq to utilise the Oil Sands Technology in the USA.
Based on the results of the preliminary work undertaken to date in accordance with the MoU, TomCo is pleased to announce that it is has now entered into the Exclusivity Agreement with Valkor, pursuant to which the Company and Valkor have agreed to:
· study the potential to deploy the Oil Sands Technology at a suitable location. The desktop study of the Group's Leases determined that, while oil sands were present at depth, more suitable sites with near surface oil sand were identified in the vicinity of the Leases and these will be the focus of the parties going forward;
· immediately fund a Pre-FEED study, to be undertaken by Valkor and verified by a third party, to demonstrate the economic viability of the Oil Sands Technology, with a gross budget of US$250,000 to be funded equally by the parties;
· subject to contract, to establish a joint venture company ("JV Company") to pursue the development of a plant on land yet to be determined; and
· jointly negotiate with Petroteq for a licence to employ the Oil Sands Technology in future oil sands plants to be developed by the JV Company.
Should the results of the Pre-FEED study be sufficiently favourable, the Company anticipates entering into a binding agreement with Valkor to establish the JV Company. TomCo and Valkor shall each hold a 50% equity interest in the JV Company.
Under normal circumstances, it is expected that the Pre-FEED study will take approximately four weeks to complete. However, with the effects of the COVID-19 virus and the resultant travel restrictions it is likely the study will take longer. If required, the parties can mutually agree to extend the Exclusivity Period.
TurboShale Update
With the global effects of the COVID-19 virus still developing, the Company has taken the decision to postpone the next test of the Turboshale RF technology. The Company will continue to explore its potential with laboratory based testing until a field test can be planned.
John Potter, CEO, commented: "I am very pleased to announce the signing of the Exclusivity Agreement with Valkor as we seek to develop our relationship with the ultimate goal of forming the JV Company. The Pre-FEED study will include a 3rd party verification of the commercial scale plant design against Petroteq's operational plant at Vernal, Utah. The results of this and the rest of the work from the study will result in a financial model to determine the financial viability of the commercial plant. I look forward to announcing the results as soon as possible."
Enquiries:
TomCo Energy plc
Stephen West (Chairman) / John Potter (CEO) +44 (0)20 3823 3635
Strand Hanson Limited (Nominated Adviser)
James Harris / Richard Tulloch / James Dance +44 (0)20 7409 3494
Turner Pope (Broker)
Andy Thacker / Zoe Alexander +44 (0)20 3657 0050
For further information, please visit www.tomcoenergy.com.
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014.
