Petrogrand: Clarifies Gazprom Neft Partnership and Letter of Intent

On 21 February 2014, it was communicated to the market that Petrogrand AB had entered into a collaboration agreement with Gazprom Neft.

Neither the contract negotiations with Gazprom Neft, the agreement itself nor the press release have been authorized or decided by the Board of Directors of Petrogrand.

The referred to collaboration agreement is a non-binding letter of intent, stating that the parties shall negotiate contracts primarily regarding geological surveys and terms for an option to acquire Petrogrand EP LLC and Petrogrand Invest LLC. The letter of intent is not signed by authorized signatories of Petrogrand.

The original statement read:

Petrogrand AB and Gazprom Neft have today entered a cooperation agreement to jointly work for the exploration of the license area Nizhnepaninsky and Muromsky 2.

Gazprom Neft according to the agreement is to finance 100 percent of the exploration activities to be established for the two blocks, including the drilling of wells.

In return, the parties have agreed that Gazprom Neft has an option to acquire 100% of Petrogrand’s subsidiary Petrogrand EP LLC and Petrogrand Invest LLC, who owns the respective licenses. The price to be paid for such acquisitions shall be based on the amount of reserves discovered through exploration.

Exploration work is planned to take place during the winter period in 2014/15 and will involve the construction and drilling of new exploration and appraisal wells in the license area Nizhnepaninsky and Muromsky 2.

The final agreement requires approval by the Board of Directors.