Candax Energy Inc. says that its subsidiary, Candax Madagascar Limited (CML), has finalized an agreement to sell its 10% working interest in Block 1101 in Madagascar (the "Block") to Oyster Oil & Gas Limited (Oyster).

Upon closing, Candax will receive a cash payment of $500,000. An additional $500,000 is to be paid in a combination of cash and shares of Oyster upon the drilling of the first exploration well on the Block. Candax will continue to retain upside on the Block through a combination of contingent payments, including certain contingent future payments from Oyster of up to $3 million as well as a share of future contingent production royalties of up to $15 million from the Block Operator, Afren.

"We are very pleased to continue to retain upside in this Block's world class exploration potential while de-risking our exposure to zero," said Benoit Debray, Chairman and CEO of Candax "We look forward to seeing the operator, Afren, and Oyster move forward with the development of the block. This transaction is consistent with our strategy to focus our efforts on the development of our encouraging prospects in Tunisia."

Tags: Candax Energy Inc.