$90.0 million on Frontier Exploration License 2/13 and $110.0 million on Frontier Exploration License
3/13.
In Frontier Exploration License 1/13, Antrim has a 25% participating interest in the area. The
License comprises approximately 0.3 million acres (1,000 square kilometers). We have fully funded the
3D seismic program on the block.
We are required to pay a corporate income tax rate of 25% and potentially a petroleum resource
rent tax of between 0% and 15% as determined by a profitability-based sliding scale.
Sales and Marketing
Production from the Jubilee Field began in November 2010, and we received our first oil revenues
in early 2011. As provided under the UUOA and the WCTP and DT PAs, we are entitled to lift and
sell our share of the Jubilee production in conjunction with the Jubilee Unit partners. We have entered
an agreement with an oil marketing agent to market our share of the Jubilee Field oil on the
international spot market, and we approve the terms of each sale proposed by such agent. We do not
anticipate entering into any long term sales agreements at this time.
There are a variety of factors which affect the market for oil, including the proximity and capacity
of transportation facilities, demand for oil, the marketing of competitive fuels and the effects of
government regulations on oil production and sales. Our revenue can be materially affected by current
economic conditions and the price of oil. However, based on the current demand for crude oil and the
fact that alternative purchasers are readily available, we believe that the loss of our marketing agent
and/or any of the purchasers identified by our marketing agent would not have a long-term material
adverse effect on our financial position or results of operations.
Competition
The oil and gas industry is competitive. We encounter strong competition from other independent
operators and from major oil companies in acquiring and developing licenses. Many of these
competitors have financial and technical resources and staff that are substantially larger than ours. As a
result, our competitors may be able to pay more for desirable oil and natural gas assets, or to evaluate,
bid for and purchase a greater number of licenses than our financial or personnel resources will permit.
Furthermore, these companies may also be better able to withstand the financial pressures of
unsuccessful wells, sustained periods of volatility in financial and commodities markets and generally
adverse global and industry-wide economic conditions, and may be better able to absorb the burdens
resulting from changes in relevant laws and regulations, which may adversely affect our competitive
position.
We are also affected by competition for drilling rigs and the availability of related equipment.
Higher commodity prices generally increase the demand for drilling rigs, supplies, services, equipment
and crews, and can lead to shortages of, and increasing costs for, drilling equipment, services and
personnel. In recent years, oil and natural gas companies have experienced higher drilling and
operating costs. Shortages of, or increasing costs for, experienced drilling crews and equipment and
services could restrict our ability to drill wells and conduct our operations.
Competition is also strong for attractive oil and natural gas producing assets, undeveloped license
areas and drilling rights, and we cannot assure our stakeholders that we will be able to successfully
compete when attempting to make further strategic acquisitions.
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