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In May 2008, we created the Canergy Fund, a U.S. Virgin Islands non-registered
investment fund, to invest in a segment of the global energy industry, the
Canadian junior oil and gas market. The Canergy Fund is managed by Canergy
Management. As of September 30, 2008, total capital contributions into the
Canergy Fund were $2.4 million (HKN investment of $2 million, representing
83% of the capital contributed).
At September 30, 2008, the Canergy Fund owned investments in the common shares
of seven Canadian junior oil and gas companies traded on the Toronto Stock
Exchange (TSX). The fair value of these common shares which were recorded as
available for sale investments on our consolidated condensed balance sheet
at September 30, 2008 was $678 thousand.
Subsequent Event – During October 2008, with the dramatic decline
in the U.S. and foreign stock markets, and in order to avoid future additional
significant losses, Canergy Fund divested of all of its common stock holdings
in Canadian junior oil and gas companies for total cumulative realized losses
of approximately $1.0 million resulting in the Canergy Growth Fund Total Return
Ratio as of October 2008 of approximately (40%). In addition, the third-party
investor exercised their right to voluntarily withdraw from the Canergy Fund
and Canergy Management, and HKN is currently the sole participant in both the
Canergy Fund and Canergy Management.
For more detailed information on the Canergy Fund and Canergy
Management, please go to www.canergygrowthfund.com.
| Please note that any opinion,
estimates or forecasts made by Canergy Management or
analysts are theirs alone and do not represent opinions,
forecasts or productions of HKN or its management.
HKN does not by its reference to such reports imply
its endorsement of or concurrence with such information,
conclusions or recommendations. |
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