Thanks,
actually as I read it, it does seem a bit like an option after all:
1) it has a term of 5 years
2) seismic is required over 3 years (and other exploratory work).
3) the premium plus seismics seem to cost $5 million over 3 years.
4) meeting the requirements of this "option" costs about $25 million and if they don't fully do it and/or get a joint operating partner then they can have the "option" to let the rights lapse (but lose what it has paid to date of lapse).
The Company holds up-stream oil and gas licence exploration rights over areas of Chad. These areas are the Chari West Block (approximately 8,181km2) in southern Chad and the Largeau Block (approximately 125,741km2) in central Chad. The Chad Licence is for a five year term from October 2004. The conditions attached to the licence include the obligation on the Company to have carried out appropriate seismic and exploratory work within three years.
This work is ongoing and the Directors expect it to be completed in early 2008 at a cost of not more than $5 million. The Company remains engaged in discussions with a number of interested third parties for potential long-term joint financing and development. The Company estimates that $25 million will be required over the next three years to maintain the licence and to carry out further exploration and development. The existence or not of extractable oil is expected to have been confirmed well before such expenditure is fully committed. If the Company is unable to sell on the Chad Licence or find an appropriate joint venture partner to share the cost of its development, the Company has the option to let its rights lapse to avoid further significant expenditure.
That's how I read it.
Krombacher - the above may be wrong
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