Syntroleum, Dorset set stranded-gas venture

April 20, 2005
Syntroleum Corp., Tulsa, has created a stranded-gas venture to strengthen its ability to participate in gas-to-liquids and other gas monetization technologies.

By OGJ editors

HOUSTON, Apr. 20 -- Syntroleum Corp., Tulsa, has created a stranded-gas venture to strengthen its ability to participate in gas-to-liquids and other gas monetization technologies.

It has entered an agreement with Dorset Group Corp., UK, which will finance the venture with an initial $40 million.

Syntroleum may use these funds to cover its costs of evaluation and acquisition of rights to stranded gas and liquids reserves, such as its Aje project on OML 113, for which it has received Nigerian government approval for the assignment of interest (OGJ Online, Apr. 14, 2005).

The approval allows the drilling of the first appraisal well on the Aje structure, to spud in August or September.

Syntroleum will pay 10% of the cost to drill, log, and test the first two wells to earn a 32.5% cost-bearing interest in the project.

The remaining funds from Dorset will be used for analyses, oil and gas project development, and acquisition of interests in oil and gas properties, both traditional and targeted for gas-to-liquids projects.

Dorset will fund 100% of the costs to acquire the rights to stranded gas and liquids projects and will receive 20% of the interest acquired by Syntroleum in any such project. Dorset will be entitled to a preferential distribution of proceeds from the projects.

Also, Syntroleum has agreed to sell 1 million shares of common stock at $10/share to Dorset.

It intends to use the net proceeds from this sale to fund a portion of the costs to drill the two initial wells on OML 113, acquire interests in and drill wells on other blocks, and pay other costs.