30647 - Candax

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Summary of Proposed Investment

Project Number

30647

Company Name

ECUMED PETROLEUM LIMITED

Date SPI Disclosed

Nov 17, 2011

Country

Tunisia

Industry

Metals and Mining

Projected Board Date

Dec 17, 2011

Status

Completed

Sector

Oil and Gas Production (Includes Development)

Department

Gbl Infrastructure & Natural Resources

Environmental Category

B - Limited

Previous Events

Approved : Dec 27, 2011
Signed : Jan 16, 2012
Invested : Feb 23, 2012

Project Description

Candax Energy Inc. (“Candax” or the “Company”) is a small independent oil and gas company mainly focused on Tunisia, and listed on the Toronto Stock Exchange. Candax owns an interest in five oil and gas fields in Tunisia, consisting of the El-Bibane (73.8% net interest), Ezzaouia (31.4%), Robbana (80%), Belli (50%), and Al-Manzah (75%) fields, and one exploration license in Madagascar. Candax seeks to raise funds in order to finance its investment program in Tunisia which aims to enhance production from its mature asset base (currently approximately 320 barrels of oil per day (“bopd”) on average) by improving reservoir understanding, drilling new wells, and executing other recovery techniques (the “Project”).
With the proposed development program, the Company is expecting to increase production to approximately 700 bopd by the end of 2012, and keep growing at a similar trend over the following years from its existing base, in addition to any acquisition the Company may make.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	23.56

Development Impact

The Project is expected to have the following development impacts:
1. Value extraction out of mature, marginal fields: The Project involves investments aimed at prolonging the life of mature fields which, given their marginal nature, would otherwise see production decline quickly and be abandoned within the next few years.
2. Contribution to government revenues: The Project will generate fiscal receipts in the form of royalties, corporate taxes and participation in the production through the Tunisian national oil company ("ETAP").
3. Demonstration effect: The Project supports a junior oil and gas company with assets in Tunisia. Increase in production and positive returns to shareholders should incentivize more investors to supply capital for similar ventures in the country that focus on marginal and mature field development.
4. Preservation and creation of employment: By sustaining production for a longer period in the Company''s mature fields, the Project will maintain current employment levels. Approximately 140 families rely on their income from jobs sourced on these fields. Furthermore, the Company is committed to create managerial positions in its Tunisian offices as well as operating positions for the development of the fields.
5. Generating additional business for local and national suppliers: Candax''s local procurement will have a positive impact on regional economic activity through the purchase of equipment, products and services.
6. Improve Tunisia''s energy account trading balance: Tunisia currently has a negative energy account trading balance. Production from the Project will help alleviate the energy trade deficit and raise foreign exchange earnings.

The following indicators will be tracked throughout the life of the Project: (a) Annual output levels; (b) Tax and other payments made to government; (c) Employment; and (d) Domestic purchases (US$).

Country Risk Mitigation and Stamp of Approval: Given the recent turmoil in Tunisia, IFC''s investment in Candax is seen by the Company and the sponsor as providing a vital signal to other investors about the World Bank Group''s confidence in the long term potential of Tunisia and the direction of its political transition.

Corporate Governance Expertise: Candax is currently seeking to regain the confidence of investors following operational difficulties it faced while under the previous management. It is also seeking to comfort potential investors that, despite Geofinance having become a majority shareholder, the Company will apply best corporate governance practices to ensure the protection of minority investors. Candax therefore sees IFC''s role as crucial in both aspects. IFC has engaged in detailed discussions with the Company''s board and has included specific provisions in the legal agreements to enhance corporate governance.

E&S Expertise: IFC will apply its unique experience gained from working with small and medium oil and gas companies in developing countries to assist Candax in strengthening its E&S practices. More specifically, this will include helping Candax develop (i) a public consultation and disclosure plan; (ii) a community development program; and (iii) assess options for associated gas utilization as well as for produced water disposal.

Long term partnership: Candax wants to establish a long-term strategic partnership with IFC and has indicated an interest in working with IFC on future financing opportunities as the Company grows either organically or through acquisitions. IFC is one of the few institutions capable of providing both a deep local expertise and a full range of debt and equity instruments at either the corporate or asset level.

This is a Category B project because a limited number of specific E&S impacts may result, that can be avoided or mitigated by adhering to industry recognized standards, guidelines, design criteria and IFC Performance Standards. Candax’s facilities are well established and the Company follows good international industry practice through the implementation of the standards and internationally recognised procedures contained within their comprehensive health, safety and environmental management system. The management system will be further strengthened through the adoption and integration of IFC’s Performance Standards and applicable EHS Guidelines.

Information about potential environmental and social impacts and how they will be addressed by the company is summarized in the Environmental and Social Review Summary.

Contacts

For Inquiries About the Project, Contact

Charlotte May
Corporate Secretary
130 Adelaide St West, Suite 1010
Toronto, ON M5H 3P5
Canada
Telephone: 416 368 9137
Fax: 416 364 5400
www.candax.com

For Inquiries and Comments About IFC, Contact

General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

Local Access of Project Documentation

Ecumed Petroleum Ltd. (Tunisia Office)
Rue du Lac Windermere
les Berges du Lac, 1053
Tunis, Tunisia
Phone: +216 71 962 611

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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