Australia's NuEnergy Alters Tanzania CBM JV Deal

NuEnergy Gas has agreed to modify a joint venture agreement signed in November with Tancoal Energy, a subsidiary of Intra Energy Corp. The Unconventional Gas Joint Venture Variation Agreement (JVVA) captures all unconventional gas in Tanzania, which includes coal bed methane and shale gas.

According to the agreement, Tancoal will hold 30% and NuEnergy will hold 70% of the venture. Tancoal's 30% share to be carried by NuEnergy until any unconventional gas extracted reaches a revenue stage, or for a period of 5 years from commencement, whichever comes first.

Also, upon identification by NuEnergy of any unconventional gas resources that are economically viable, Tancoal shall allow NuEnergy to extract and sell any gas produced. Tancoal will receive a 5% royalty from NuEnergy's revenues from the sale of unconventional gas resources extracted from Tancoal's concessions.

The agreement says that NuEnergy shall fully fund and bear all costs of any exploration, development or extraction works in respect of unconventional gas in Tancoal's areas with the parties using best efforts to cooperate and share drilling resources.

NuEnergy will spend $1 million over the initial 2 years for expenditure on unconventional gas activities on the areas. After this 2 year period the parties may terminate if the areas are not considered economically viable, or proceed, whereby NuEnergy commits to a further $1 million over the remaining 3 year period.