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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
Date of Report (date of earliest event reported): October 23,
2000
AMG OIL LTD.
(Exact name of registrant as specified in its charter)
Nevada 000-30087 N/A
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
Suite 700, 700 - 6th Avenue, SW
Calgary, AB, T2P-0T8
(Address of Principal Executive
Offices, including Zip Code)
(403) 531-9718
(Registrant's Telephone Number,
including Area Code)
(Former name or former address, if changed since last report)
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Item 5. Other Events.
On October 23, 2000, AMG Oil Ltd.'s (the "Company") board of
directors approved a letter agreement with Magellan Petroleum
Australia Limited "Magellan." Pursuant to the agreement the Company
shall grant Magellan a twenty percent (20%) beneficial interest in
the South Area of PEP 38256, which includes the site of the Ealing-
1 well, with effect from the date on which the Ealing-1 well
spudded ("Effective Date"); The material terms of the agreement
provide:
In consideration of the grant of the beneficial interest Magellan
shall contribute:
(a) thirty-four percent (34%) of the costs incurred under the
PEP 38256 Joint Venture Operating Agreement, dated 5
October 2000 ("JVOA"), on the drilling and the plugging
and abandoning or the setting of casing to total depth
("Drilling and Casing") of the Ealing-1 well, capped at
a total cost to Magellan of NZ$777,580, and
thereafter, contribute twenty percent (20%) of the cost of joint
operations on the Ealing-1 well and operations in the Southern
Area, if any.
Additionally, Magellan may elect, no later than 48 hours after
notification in writing from the Company that the Arcadia-1 well
has spudded in the North Area of PEP 38256, to acquire a twenty
percent (20%) interest in the whole of PEP 38256 and a twenty
percent (20%) Participating Interest in the Joint Venture, by
funding:
(a) an additional six percent (6%) of the total cost of
Drilling and Casing the Ealing-1 well up to a total
Drilling and Casing cost of NZ$2,287,000 and twenty
percent (20%) of any Drilling and Casing costs above
NZ$2,287,000, capped at a total cost to Magellan of
NZ$162,280;
(b) forty percent (40%) of the total cost of the Drilling and
Casing of the Arcadia-1 well, capped at a total cost to
Magellan of NZ$1,100,880;
(c) forty percent (40%) of future joint operations on PEP
38256, capped at a total cost to Magellan of
NZ$1,020,000; and
thereafter, its twenty percent (20%) Participating Interest
share of future joint operations under the JVOA.
If Magellan does not elect under the above paragraph to participate
in the drilling of the Arcadia-1 well, no later than one month
after receipt by it of the Ealing-1 fully interpretative well
completion report, Magellan shall elect either to:
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(a) hold its beneficial interest in the South Area at twenty
percent (20%) by funding:
(1) an additional six percent (6%) of the total cost of
Drilling and Casing the Ealing-1 well up to a total
Drilling and Casing cost of NZ$2,287,000 and twenty
percent (20%) of any Drilling and Casing costs
above NZ$2,287,000, capped at a total cost to
Magellan of NZ$162,280; and
(2) forty percent (40%) of future joint operations on
the South Area of PEP38256, capped at a cost to
Magellan of NZ$700,000; or
(b) reduce its beneficial interest in the South Area to a
twelve percent (12%) Participating Interest (Southern
Area only) by increasing its contribution to the Drilling
and Casing costs of the Ealing-1 well under paragraph
2(i) above to an amount of NZ$788,952, and receiving a
reimbursement equal to eight percent (8%) of any over-
expenditures to which it may have contributed at the
twenty percent (20%) level under paragraph 2(ii) above;
or
(c) withdraw from the Joint Venture.
The agreement is subject to a number of conditions one of which
requires the parties to enter into a more formal Farmout Agreement
fully detailing these terms and conditions.
The Company had sufficient funding to drill the first of the two
wells and thereby satisfy the year three conditions attached to the
grant of PEP 38256 from the New Zealand government. However, under
the terms of an option agreement granted to Company by the operator
of permit, Indo-Pacific Energy Ltd., the Company agreed to fund the
drilling of two wells in order to earn an 80% interest in the
permit. If Magellan chooses not to elect under the Agreement to
participate in the drilling of the second exploration well
(Arcadia-1), the Company will not have sufficient funds to pay for
the second exploration well. Should the Company fail to raise the
funds necessary to pay for the second exploration well, it will be
in default of its obligations to Indo-Pacific Energy Ltd, which
would seek to recover the funds owing, would not assign the 50%
interest to be earned by AMG in the permit, and could take action
under the default provisions of the joint venture agreement, with
respect to the equity presently held by AMG Oil.
Magellan Petroleum Australia Ltd. is an Australian-listed oil
exploration and production company (ASX:MAG), 51% of which is held
by Magellan Petroleum Corporation (NASDAQ:MPET), a US-incorporated
oil and gas exploration company. There is no affiliation between
the Orion Group and the Company.
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Item 7(c). Exhibits.
List of Exhibits
Exhibit No. Exhibit Description Page No
99.1 Letter Agreement amongst AMG Oil Ltd. and
Magellan Petroleum Australia Limited dated
October 19, 2000;
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
AMG OIL LTD.
Date: November 7, 2000 By: /s/ Cameron Fink
Cameron Fink
President
