Hancock, which had its stake in Sun diluted late last year from 10.56% to 7.57% following a 1:25 share consolidation, loaned Sun $957,806 in February 2015 and added a 5% per annum interest rate in June 2016, with the loan to be repaid by February 2018, but the new payment date has been set at March 21, 2021.
Sun secured Bowspirit in August after bidding on open acreage, paying the full initial leasing cost of $300,000.
The joint venturers believe that the structure at Bowspirit in Breton Sound, close to existing oil infrastructure, can be developed with up to four horizontal wells and could potentially be produced through a simple unmanned production platform.
Saratoga Resources drilled and produced a 750ft horizontal well in an analogous quality, albeit thinner sand, 12km south of Bowspirit.
In the last three years the well has produced over 460,000 barrels of oil and is still producing at more than 300bopd.
Sun anticipates drilling wells with longer horizontal sections in a thicker column of oil in Bowsprit, which has been assessed to contain an undeveloped conventional Miocene aged oil sand at a depth of about 7400ft above a deeper 9500ft gas field that was developed in 1960s by Shell and produced through to 1990s.
Consequently, the Bowsprit field contains 14 vertical well penetrations and has demonstrated producible oil.
The 20 to 50ft thick oil sand was flowed successfully from two wells and produced about 75,000bbl of oil, but was not of commercial significance at the time.
The deeper gas field was abandoned and the area relinquished by the former owner in the 1990s before the advent of horizontal drilling.
Sun is now developing the field with JV partner Pinnacle Energy on a 50-50 basis, subject to the inection of additional equity to develop the project.
There are 16 historical wells drilled between 1952 and 1982 on the 1000 acre lease.
Winform has agreed to amendments to enable the loan to be repaid from Sun's share of the future net cash flow from the Louisiana oil joint venture, and will allow the Perth-based junior to raise up to $10 million in new funds for working capital, capital expenditure and operating expenses.
Sun will apply 67% of the net cash flow derived by its Louisiana subsidiary during the first 24 months of production of the project in repayment of the loan and (if required) up to 100% of net cash flow from month 25 onward following first oil production.
Sun's directors have also agreed to support the company with a short-term working capital loan of $150,000 and will defer payment of directors' fees until the additional capital is raised by the company.
"This agreement gives Sun adequate leeway to rejuvenate the company and in particular the introduction of new capital into Sun for funding the Bowspirit oil project," chairman Ian McCubbing said.
