SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): June 11, 1997
EuroGas, Inc.
(Exact Name of Registrant as Specified in its Charter)
Utah 33-1381-D 87-0427676
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
942 East 7145 South, #101A, Midvale, Utah 84047
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (801) 255-0862
(Former name, former address, and formal fiscal year, if changed since
last report)
ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS
On June 11, 1997, EuroGas, Inc. (the "Company") acquired all of the issued
and outstanding stock of OMV (Jakutien) Exploration GmbH ("OMVJ") from OMV
Group, Austria's largest industrial concern in exchange for $6,000,000 (U.S.)
and a 5% interest in OMVJ's net profits.
OMVJ's primary asset is a 50% interest in the joint venture (known as
"TAKT") with Sahaneftegas, the Yakutia's national oil and gas company. TAKT was
formed to appraise, explore, and develop, and, when appropriate, export oil and
gas reserves in a large portion of Yakutia (officially known as the Sakha
Republic). Yakutia has the largest land area of the Russian federations located
in the far eastern portion of what was formerly the Soviet Union. TAKT's rights
also include the exploration, production, and development of all other mineral
resources except for diamonds and also includes the rights to sell consumer
products in Yakutia.
Yakutia is thinly populated (just over 1,000,000 people) and covers
approximately 3,100,000 square kilometers which the United States Geological
Service has rated as extremely rich in natural resources. There has been
limited commercial exploitation of hydrocarbons in Yakutia and those in place
are generally limited to providing fuel supplied heat and energy to local urban
and industrial complexes partly because of the general remoteness and poor
transportation network currently in existence which makes harsh demand on the
supply and distribution system. Since 1991, the Yakutian government has put in
place an economic and legal system which is designed to encourage foreign
investment and export of hydrocarbons. The Company's interest in acquiring OMVJ
is based in large part on the Company's belief that TAKT is well-positioned to
participate in the perceived international gas export project which has been
envisioned pursuant to feasibility studies already conducted by Korean, Chinese,
and Japanese consortiums.
TAKT currently holds two large exploration blocks located near the city
Lensk, which covers approximately 21,300 square kilometers (approximately 9,650
square miles located in the southeast of the East Siberian platform or East
Siberian Basin) which has been approved for exploration by both the Yakutian
government and the USSR State Committee for Geology. TAKT also holds first
right refusal on adjoining exploration blocks. TAKT has been conducting
activities within the two blocks for the past six years employing modern seismic
and exploration techniques with encouraging results.
The exploration phase which is expected to last for another three to five
years is estimated to cost in its entirety approximately $28,000,000 (U.S.) of
which OMVJ's share would be $14,000,000 (U.S.). OMVJ has already spent
approximately $6,000,000 (U.S.) on the project.
TAKT has agreed with the Yakutian government to spend 2.0% of its budget in
the exploration phase for environmental and social concern obligations and
another 2.5% of the development stage expenditures, but in no event to exceed
$30,000,000 (U.S.). Such expenses are recoverable against royalties and profits
payable. The production carries with it an 8% royalty and a 40% net profits
interest payable to the Yakutian government.
TAKT and Sahaneftegas each appoint two members to the board of directors of
TAKT with OMVJ having the right to nominate the chairman who holds the tie-
breaking vote. Unanimous votes are required for any amendments of the joint
venture itself, the admission of new partners, any buying or selling of shares,
and reappointment or dismissal of the director general.
EuroGas has selected Wolfgang Rauball to act as the Managing Director of
OMVJ and Wolfgang Rauball and another person to be selected by EuroGas are to be
nominated as directors of TAKT with Wolfgang Rauball to hold the position of
Chairman of the Board.
EuroGas has already been approached by a number of large oil and gas
concerns about participating in OMVJ's Yakutian project and TAKT. These
contacts and discussions are preliminary in nature, and there can be no
assurance that any transaction will be entered into with any larger concern.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS
The Financial Statements for the business acquired, including the necessary
pro forma financial information shall be filed when they become available.
EXHIBITS
<TABLE>
<CAPTION>
SEC
Exhibit Reference
Number Number Title of Document Location
<S> <C> <C> <C>
1 10 Purchase Agreement between EuroGas and OMV Group *
for the Acquisition of OMV (Jakutien) Exploration GmbH
2 3 Articles of Organization of OMV (Jakutien) Exploration *
GmbH
3 10 TAKT Joint Venture Agreement *
</TABLE>
[FN]
*The English translations of these documents were not available at the time of
filing and will be filed by amendment.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Issuer has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
EUROGAS, INC.
Date: June 26, 1997 By /s/ Hank Blankenstein
Hank Blankenstein, Secretary/Treasurer
