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Red Emperor's shares suffer as joint-venture agreement reworked
Red Emperor Resources announced on Thursday that it has entered into an amended heads of agreement with Oil Ventures Pty Limited for the acquisition of several strategic leases in California.
An initial agreement between the two companies was signed in October but has been amended after Oil Ventures failed to agree commercial terms with the two majority mineral rights owners of two "highly prospective areas of mutual interest (AMI)" that it identified in the Sacramento Gas Basin.
Under the terms of the original agreement, Red Emperor would earn a 60% interest in a joint venture by contributing 100% of the budget for the acquisition of the leases at £0.64m.
However, under the terms of the new agreement the companies may explore AMI if they form a joint venture to acquire two oil and gas drilling lease packages.
Each lease will be held by a separate US company established by both companies and Red Emperor owning a 60% holding, and Oil Ventures a 40% holding in each joint venture.
In a statement, Red Emperor Resources said: "While the company is disappointed in not being able to execute any lease agreements as anticipated, it remains focused on reviewing and hopefully acquiring additional oil and gas assets to complement its current portfolio of projects."
As of 1618 BST, Red Emperor Resources' shares were down 7.51% at 0.80p.