Investment Update

RNS Number : 8219M

Xtract Energy plc

01 June 2010

 



1 June 2010

AIM: XTR

XTRACT ENERGY PLC

("Xtract" or the "Company")

Investment update - Elko Energy

Xtract Energy Plc ("Xtract") notes below the Shareholder Update which was issued by Elko Energy Inc ("Elko Energy") to its shareholders on Monday 31 May and the related announcement by Noreco Energy Company ASA ("Noreco") on the Olso Stock Exchange. Xtract currently owns approximately 50.0% of the issued capital of Elko Energy.

"Elko Energy Inc. ('Elko') provides this further regular update on the ongoing development of the Elko business. 

Denmark

Elko is pleased to announce that an agreement with Norwegian Energy Company ASA ('Noreco') has recently been finalized under which Noreco will farm in to the 02/05 licence offshore Denmark. Noreco will become operator for the licence with 47% working interest, Elko will retain 33% and the remaining 20% will continue to be held by the existing partner, Danish North Sea Fund.

Under the terms of the arrangement, Noreco will pay Elko about USD 1 million in cash for its share of past costs. In the event of detecting hydrocarbons on the first exploration well, Noreco will cover Elko's share of the costs associated with the production testing phase.

The partners see significant resource potential in the under-explored 02/05 licence and are

engaged in further technical studies to optimize the location for the first exploration well which is planned to be drilled in 2011. Further updates will be provided as appropriate.

The effective date of the transaction is April 1, 2010. The transaction is subject to approval from Danish Energy Agency.

I am very pleased to welcome Noreco as a partner who shares our vision for the 02/05 licence, has good regional knowledge and drilling experience as an operator. I look forward to testing this exciting exploration play opportunity in 2011.

Peter Moir

President

May 31 2010

About Noreco

Noreco is a fast growing Norwegian, independent oil and gas company with offices in Stavanger, Copenhagen and Olso. The company's focus is to explore, develop and produce oil and gas in the North Sea. Since incorporation in 2005, the company has grown rapidly through license rounds and acquisitions. Noreco operates in Norway, Denmark and United Kingdom, and employs over 80 oil and gas professionals. Noreco is publicly listed on the Oslo Børs (ticker NOR). It has more than 50 licences in the North Sea and the Norwegian Sea with oil and gas production from 8 offshore fields averaging a production rate of 13,650 boepd as at March 2010. Further details on Noreco can be found at www.noreco.com ".

Commenting further on the transaction, Andy Morrison, Chief Executive of Xtract said, "It was the significant blue sky potential of the Danish licence that first attracted Xtract to Elko in 2007, so we are particularly pleased to see the asset being taken forward towards the drilling stage next year."

Qualified Person

In accordance with AIM Guidelines, Peter Moir, B.Sc. Civil Engineering, M.Eng. Petroleum Engineering, UK Chartered Engineer and President of Elko Energy Inc is the qualified person as defined in the Guidance Note for Mining, Oil and Gas Companies, February 2010, of the London Stock Exchange, that has reviewed the technical information contained in this press release. Mr Moir has more than 30 years experience in technical, operational and commercial aspects of the E&P business.

Enquiries please contact:

Xtract Energy	Andy Morrison, CEO	[phone]
Cenkos Securities Plc	Jon Fitzpatrick Ken Fleming Alan Stewart	[phone] [phone]

About Xtract Energy

Xtract identifies and invests in a diversified portfolio of early stage energy sector technologies and businesses with significant growth potential. The Company aims to work closely with the associated management teams to achieve critical project milestones, to finance later development stages, and to build and crystallise value for all shareholders and partners.

For further information on Xtract please visit www.xtractenergy.co.uk

A short description of the principal assets of Xtract is set out below. These assets are either held directly or through wholly owned subsidiaries of the Company.

Extrem Energy AS ("Extrem Energy")

Extrem Energy is an exploration and production joint venture with Merty Energy of Turkey. The JV's aim is to create a new medium-sized oil and gas exploration and production business, initially focused on Turkey where Merty Energy has particular experience and expertise. Extrem Energy has a portfolio of licence interests including the high potential prospect at Candarli Bay in south-west Turkey. Xtract owns 50% of the issued share capital of Extrem Energy.

Elko Energy Inc. ("Elko")

Elko is a Canadian registered oil & gas exploration company which has interests in exploration and production licences in the Danish and Dutch North Sea. Its major asset is in the Danish North Sea; an 80% interest on 26 offshore blocks in a 5,400 sq km exploration and production licence close to the prolific Central Graben oil field. Technical work indicates the potential for significant reserves. Elko also holds a 60% operating interest in gas-bearing license blocks P1 and P2 in the Dutch North Sea. Xtract owns approximately 50.0% of Elko's issued share capital.

Zhibek Resources Ltd ("Zhibek Resources")

Zhibek Resources is an oil and gas exploration and production company which has a 72% interest in the Tash Kumyr exploration licence in the Kyrgyz Republic. Xtract has entered a farm-out agreement to fund a seismic and drilling programme for 2008-10. Xtract owns 25.0% of the issued share capital of Zhibek Resources.

Xtract Oil Ltd ("XOL")

Xtract's wholly owned subsidiary, XOL, is focused on the development of the Company's oil shale resources in Australia and the technology for oil extraction from oil shale resources. Xtract has oil shale exploration rights over mining tenements in the Julia Creek area of Queensland. In addition to evaluating third party technologies, XOL has been developing proprietary technology for the commercial extraction of liquid hydrocarbon products from oil shale.

Xtract Energy (Oil Shale) Morocco SA ("XOSM")

XOSM is a joint venture with Alraed Limited Investment Holding Company WLL, a company controlled by His Highness, Prince Bandar Bin Mohd. Bin Abdulrahman Al-Saud of Saudi Arabia. XOSM has signed a Memorandum of Understanding with the Office National des Hydrocarbures et des Mines for the purposes of evaluation and possible development of an oil shale deposit near Tarfaya, in the south west part of Morocco. Xtract currently holds 70% of the joint venture.

 

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