MPO (ASX) china talks

This from Petroleum News - Molopo in talks for China sale.
Monday, 2 November 2009 - MOLOPO Australia is in negotiations with Pacific Asia Petroleum for the sale of its 26.1% gross interest in Fortune Liulin Gas Company, which operates the Liulin coal seam gas project in China’s Shanxi province.

In its quarterly report, Molopo said the consideration for the sale was proposed to be about 2.7 million shares in Pacific Asia Petroleum and a 2% royalty on production revenue. “Based on the most recent share price of PAP, the value of the shares offered is approximately $US12 million,” the company said. However, the company cautioned that there was no certainty the transaction would proceed, and added that if the sale was completed, it would be subject to the pre-emptive rights held by partner Fortune Oil Group.

In October, Molopo chief financial officer Anthony Bishop told PetroleumNews.net the company was considering divesting non-core assets such as the Liulin project. The Liulin project is about 500 kilometres from Beijing and benefits from state-funded infrastructure investments including road and rail links, which would help develop local and regional markets for Liulin gas. Pacific Asia Petroleum is a US-listed and headquartered company with a focus on developing a broad range of energy opportunities in China.

Meanwhile in other news, Molopo said it has completed drilling operations in the Virginia and Evander exploration area in South Africa, and started an airborne hyper spectral survey over the areas in September. The survey will be used together with a soil geochemistry sampling program to select future drilling targets. The company has also applied to test the viability of using gas currently emitted from mineral core wells as a fuel source for vehicles through the sale of compressed natural gas. “This is an innovation in South Africa and Molopo is currently negotiating a gas sales agreement for 600 million cubic feet per day. “If a GSA for this volume of gas is secured, it will enable the majority of the gas currently emitting to the atmosphere to be commercialised.” The company also announced it has applied for seven exploration rights over the Virginia and Evander areas during quarter.