Australia's oil and gas exploration firm, New Guinea Energy Limited (NGE/Company) announced that its wholly owned subsidiary, Kirkland Limited (Kirkland) has signed an agreement with Esso PNG Robin Limited (Esso), a subsidiary of Exxon Mobil Corporation, regarding the proposed sale of its 50 percent participating interest in Petroleum Prospecting Licence (PPL) 269 in Papua New Guinea (PNG) to Esso for a total consideration of $40 million cash (Sale Agreement).
Certain rights and obligations under the Sale Agreement do not become binding until a number of initial conditions precedent are satisfied over a period of 20 business days commencing from July 26. Esso is permitted to have discussions with the Operator of PPL 269 during this period, and has an absolute discretion to determine whether it is prepared to proceed with the acquisition of Kirkland’s participating interest in PPL 269 or not. The initial conditions precedent are: (a) Esso giving Kirkland a notice that Esso wishes to proceed with the transaction; (b) Kirkland obtaining the consent of the holder of the convertible bonds in NGE; and (c) NGE providing a parent company guarantee to Esso. If the initial conditions precedent are met, Esso will be required to pay a $4 million deposit to Kirkland. If the initial conditions precedent are not satisfied or waived, the sale of Kirkland’s participating interest in PPL269 to Esso will not proceed.
Completion under the Sale Agreement is contingent on satisfaction of certain additional conditions precedent, including pre-emption rights not being exercised, a variation to the PPL being approved, and government and joint venture approvals being obtained.
An indicative timetable for the implementation of the transaction is:
Using July 25 exchange rate of AUD/$ 0.9149, the likely effect of this transaction is to increase the Company’s net assets by $18.25 million.
NGE CEO Grant Worner commented,
“Receiving $40 million will significantly strengthen NGE’s balance sheet without diluting shareholders’ equity, which is an excellent outcome for the Company and shareholders in a climate where it is difficult for junior explorers to access new funds.
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