Blue Dolphin announces Langsa TAC acquisition closure

NASDAQ-listed independent oil, gas firm Blue Dolphin Energy Company announced Monday that it has closed part of its previously announced transaction with Blue Sky Langsa, Ltd. to acquire a working interest in a Technical Assistance Contract for the Langsa area, Offshore North Sumatra (Langsa TAC) in a non-cash transaction.

In June 2010, Blue Dolphin announced that it had signed a commitment letter with Blue Sky to acquire a 70% majority working interest in the Langsa TAC. The parties subsequently amended the terms of the commitment letter in order to carry out the transaction in two phases. Under the first phase, Blue Dolphin will acquire a 7% working interest in the Langsa TAC in exchange for 342,857 shares of Blue Dolphin's common stock on a post-split adjusted basis. Both parties have signed the definitive purchase and sale agreement, and Blue Dolphin has issued the common stock consideration to Blue Sky. Under the second phase, which is subject to shareholder approval, Blue Dolphin, at its option, may acquire the remaining 63% working interest in the Langsa TAC for 3,085,714 shares of Blue Dolphin's common stock on a post-split adjusted basis.

The Langsa TAC area covers approximately 77 square kilometers within the Sumatra basin and contains two oil fields. Four wells have been completed in the Malacca Formation of which one well is active and three wells are idle. The fields are located in waters less than 325 feet deep. The active well is currently producing at approximately 620 barrels per day and is gathered via a floating production storage and barge vessel operated by Mitsui Ocean Development & Engineering Co., Ltd (MODEC). An April 2010 third-party reserve study affirmed the net proven reserves were greater than 1.925 million barrels of oil, the Company said in June 2010. (alex)