A Canadian oil company, Tracer Petroleum Corp, is to form two Bermuda-based businesses.

One will be a petroleum company with projects in Indonesia, Kazakhstan and Iran. It is to be set up in Bermuda under the name Tepco.

A second company is to be set up to deal with crude swaps and petroleum trades and will be called Tracer Trading Ltd.

The board of Tracer Petroleum Corporation, which is listed on the Nasdaq as TCXXF, announced this week that it was to split the company and form a Bermuda company.

All of the company's present and future rights to upstream exploration and development projects in Indonesia, Kazakhstan, and Iran will now be transferred to Bermuda-registered Tepco. The company said the primary focus of Tepco would be to acquire and develop petroleum project interests in Iran and the Caspian Sea region, with the oil, natural gas, and gas condensate that is produced being sold through another of Tracer's business units, Tracer Trading Ltd.

Tracer has a market capitalisation of $3.067 million and last traded at 75 cents a share. Its has a 52 week high of $3.00 and low of 40.6 cents.

Tracer's president and Chief Executive Officer David Robinson said: "Tracer Petroleum Corporation reports that its Board of Directors has determined that with the numerous petroleum-related business opportunities that have been presented to the company in the Islamic Republic of Iran, it would be prudent to separate Tracer into two wholly-owned, strategic business units: Tracer Exploration & Production Company.

"All of the company's present and future rights to upstream exploration and development projects in Indonesia, Kazakhstan, and Iran will be transferred to Bermuda-registered Tepco. The primary focus of Tepco will be to acquire and develop petroleum project interests in Iran and the Caspian Sea region, with the oil, natural gas, and gas condensate that is produced being sold through another of Tracer's business units, Tracer Trading Ltd.'' He added that Tepco would initially have offices in Calgary, Bermuda and Tehran, and would also likely open offices in London and Dubai. He went on to say the other company would be Tracer Trading Ltd.

He said: "Also Bermuda-registered, wholly owned TTL will hold 100 percent of Tracer's rights to crude swaps and petroleum trading, in Iran and elsewhere.

"Initially, TTL will undertake the crude swaps and petroleum trading in conjunction with major commodity trading firms. TTL is currently working on seven different significant petroleum trading transactions involving Iran.

Additionally, Tracer has been asked by a number of companies in Iran to assist with procuring petroleum-related goods and/or services from companies in the West. Business opportunities such as this will now be run through TTL.'' He said that initially, TTL's operating offices would be in Geneva, Bermuda and Tehran and will also likely require offices in London, Dubai, and Singapore, in order to properly handle the numerous trading and procurement opportunities involving the petroleum industry in Iran.

Mr. Robinson added: "By splitting Tracer into two distinct units, each unit should be better able to focus on the opportunities presented to it.

Furthermore, the directors believe that shareholder value could be substantially increased should the company decide to spin off TTL to the shareholders of Tracer as a separate public company. This could be achieved by way of a special dividend.''