The Energy and Mining Ventures of Hoifu Energy
Hoifu Energy is principally engaged in oil and gas exploration, exploitation and operation as well as the international trading business of oil, gas and chemicals. Through a series of mergers and acquisitions, it currently owns the entire and partial contracted energy and mineral resources in 7 oilfield blocks and 2 copper and gold mines respectively situated in Madagascar, Egypt, Tunisia and Kenya, namely:
Madagascar Oilfield Block 2101
Hoifu Energy through its wholly-owned subsidiary, Madagascar Northern Petroleum Company Limited (“MNPC”), entered into a production sharing contract with Office Des Mines Nationales Et Des Industries Strategiques (English translation being: The National Office for Mining and Strategic Industries) (“OMNIS”) on 12 October 2006, thereby acquiring the entire equity interest in Madagascar Oilfield Block 2101, an onshore block of land of approximately 10,400 square kilometers in the northern part of Madagascar.
According to the Exploration, Exploitation and Oil and Gas Production Sharing Contract, MNPC owns 100% interest in the exploration, exploitation and operation rights and profit sharing right of Madagascar Oilfield Block 2101, and is vested with the relevant rights to engage in oil and gas exploration for 8 years (with possible extensions of 2 years and 5 years for oil and gas respectively) and exploitation and operation of oil for 25 years (with possible extension of 5 years) and gas for 35 years (with possible extension of 10 years) at Madagascar Oilfield Block 2101.
Depending on the rate of oil and gas production of Madagascar Oilfield Block 2101, MNPC will share the remaining oil and gas production after government royalty and recovery costs according to the sharing ratios in the range of 40% to 72.5% as set out in the Exploration, Exploitation and Oil and Gas Production Sharing Contract.
In recent years, several international reputable oil and gas companies own the equity interests and oil and gas sharing rights in oilfield blocks in Madagascar through acquisition. A few of these oilfield blocks in Madagascar discovered and obtained substantial volume of oil and gas available for commercialization. The Madagascar oilfield block 3102, which is controlled by Total S.A., and the Madagascar oilfield block 3104, which is controlled by Madagascar Oil Limited, have already drilled more than 200 wells and entered into cooperative well-drilling and exploitation phase. The Madagascar oilfield block 3112, which is controlled by Madagascar Southern Petroleum Company Limited, a company owned by Dr. Hui Chi Ming, the Chairman and an executive Director of Hoifu Energy, has also discovered and obtained significant oil and gas reserves and entered the trial production stage. Therefore, Hoifu Energy is optimistic about the prospects of the exploration, exploitation and operation of Madagascar Oilfield Block 2101.
Block 2 West Esh EI Mallaha Oilfield in the Arab Republic of Egypt
On 17 September 2006, upon approval by a decree being passed by the local parliament of the Arab Republic of Egypt and signed by the country’s president, Hoifu Energy through its subsidiary, Aminex Petroleum Egypt Ltd (“APEL”), obtained 60% interest in the exploration, exploitation and operation rights of the oil field block 2 of West Esh El Mellaha in the Arab Republic of Egypt.
Situated in the oil field block 2 of West Esh El Mellaha in the Arab Republic of Egypt (”Egypt Oil Field Block 2”), the project covers an area of approximately 1,000 square kilometers. It is vested with the rights of exploration for a term of 8 years and exploitation and production for a term of 20 years as well as an oil and gas production share arrangement.
Egypt Oil Field Block 2 is located at the northwest of the five spots where oil has been discovered, namely Rabeh, Rabeh East, Tawoos, Tanan and Wadi Al Sahl. The Rabeh-1 well was drilled in 1997 and the tested combination rate obtained from the marine sand at the base of the Late Miocene (in form of Nukhul) and the shallow marine sand of the Upper Cretaceous (in form of Matulla) warrants a daily production of 6,800 barrels of crude oil.
Several oil fields located at the southeast of Egypt Oil Field Block 2 have confirmed the existence of substantial reserves of oil in the matured source rock within the adjacent basins. It is believed that similar conditions would extend to the basin area of Egypt Oil Field Block 2. The block of West Esh El Mallaha contains all essential factors for an efficient oil system. The source rocks, evidence of the production, transfer, oil reservoir, sealing and accumulating processes are all found in the oil generated in the adjacent areas, and massive favourable depositional traps and depositional traps are outlined.
APEL, a subsidiary of Hoifu Energy, possesses a great amount of effective seismic data regarding Egypt Oil Field Block 2 and has currently identified five potential favourable depositional traps. The drilled wells recorded an extremely high level of natural gas (900 feet interval), in which quality crude oil was explored and obtained. The crude oil was tested with the petroleum samples, and the result was equal to the oil gravity level of the American Petroleum Institute at 38, which is also the same as the prevailing average gravity of the Brent Crude, a major trading classification of sweet light crude oil. The relevant exploration result creates favourable conditions for Hoifu Energy’s on-going success in the oil field projects in Egypt.
5 oilfield blocks in the area under the Ksar Hadada Permit in Tunisia
Hoifu Energy through its wholly-owned subsidiary, China Oil Resources Group Limited (“China Oil Resources”), owns the exploration, exploitation and production rights granted by the Government of Tunisia in relation to 5 oilfield blocks in the region under the Ksar Hadada Permit with a total area of 2,252 square kilometers and the benefits of contracted oil and gas production sharing arrangement.
According to the Production Sharing Contract dated 20 December 2003 in relation to the oil and gas exploration and exploitation in the region under the Ksar Hadada Permit, China Oil Resources is vested with the rights of exploration for a term of 7 years, exploitation for a term of 30 years as well as an oil and gas production sharing arrangement.
Amid the surging demand for oil and gas in the global market, and encouraged by the successful oil production in blocks adjacent to areas under the Ksar Hadada Permit in Tunisia invested and exploited by Chinook Energy Inc from Canada, Hoifu Energy is optimistic about the prospects and value of the oilfield blocks under the Ksar Hadada Permit in Tunisia and determined to further expand its resources reserve for oil and gas exploration and development.
Kenya Copper Mine 253 and Kenya Gold Mine 341
Hoifu Energy, which is principally engaged in the business of oil and gas development and operation, succeeded in acquiring the exploration and exploitation of copper and gold mines in Kenya, materializing diversification of resources reserve and creating strategic significance for the future development of Hoifu Energy.
Hoifu Energy through its subsidiary, ZHEN HUA COMPANY LIMITED (“ZHCL”), owns 60% interest in the exploration, exploitation and operation rights of Kenya Mine 253 and Kenya Mine 341. Kenya Copper Mine 253 covers an area of 1,056 square kilometers while Kenya Gold Mine 341 covers an area of 417 square kilometers.
Pursuant to the Licence 253 and relevant provisions of the Mining Act of Kenya, ZHCL is authorized to prospect, explore and mine industrial minerals (including but not limited to copper) in Kenya Mine 253 for a term of one year commencing from 15 April 2011, subject to renewal by the relevant authorities. The current expiry date of Licence 253 is 14 April 2014.
On 3 January 2013, the Kenya government granted the Licence 341 to ZHCL for exploring such minerals as gold and iron ore in Kenya Mine 341 for a term of two years commencing from 3 January 2013, subject to renewal by the relevant government authorities.
As to the status of Kenya Mine 253, after the implementation of the exploration works organized by ZHCL, a vast ore zone with promising copper reserve was discovered. ZHCL has obtained from Kenya Mine 253 a certain quantity of ores with a copper content of 5.29%. ZHCL has already sold 60 tons of the ores to a corporation in China.
Hoifu Energy will commence full-scale exploration, exploitation and operation in its gold and copper mines in Kenya. By diversifying into oil, gas, copper and gold resources operations overseas within a short span of time, Hoifu Energy has managed to create a favourable environment for the exploration and operation of precious natural resources.