New Zealand Energy Corp. (NZEC or the Company) reported that it has signed a binding Letter Agreement with L&M Energy Limited (LME) whereby LME will pay NZEC $17.74 million (CAD 18.25 million) to form a 50/50 joint venture (TWN Joint Venture) to explore, develop and operate the Tariki, Waihapa and Ngaere Petroleum Mining Licenses (TWN Licenses), the Waihapa Production Station and associated pipelines and infrastructure in New Zealand. The parties intend to finalize the definitive agreements shortly with the objective of closing the transaction contemporaneously with closing of the acquisition of the assets from Origin Energy Resources NZ (TAWN) Ltd. (Origin) (the Waihapa Assets Acquisition). NZEC will become the operator of the TWN Licenses and the Waihapa Production Station. Decisions regarding exploration, development and operations of the Waihapa Assets will be made by management committees with equal representation from both companies.
NZEC believes the Waihapa Assets Acquisition and TWN Joint Venture will provide significant benefit to its shareholders, transforming NZEC into a fully integrated upstream/midstream company with the cash flow, infrastructure and inventory to support long-term growth. Closing the two transactions will bring a number of near-term catalysts and longer-term benefits to NZEC:
“L&M Energy’s $17.74 million (CAD 18.25 million) investment is a significant show of confidence in NZEC’s exploration and development plans for the TWN Licenses and Waihapa Production Station,” said John Proust, CEO and director of NZEC. “LME has been exploring and operating in New Zealand since 1969 and brings financial strength combined with business and technical expertise to the joint venture.
“With the $17.74 million (CAD 18.25 million) purchase commitment from L&M Energy, NZEC is continuing to pursue a number of strategic options to fund the remaining $11.67 million (CAD 12 million) required to close the acquisition of assets from Origin and add to existing working capital,” continued Proust. “NZEC has developed an exploration and development program for the TWN Licenses, to be funded 50 percent by L&M Energy as an equal partner, which will bring both immediate value and long-term growth to the Company. We look forward to closing the acquisition of assets from Origin and executing our development strategy for the benefit of our partners and shareholders.”
LME will pay NZEC $17.74 million (CAD 18.25 million), comprising half of the purchase price for the Waihapa Assets plus half of NZEC’s costs incurred to date. Closing the TWN Joint Venture is subject to government and regulatory approvals, obtaining the additional funding and the closing of the Sale and Purchase Agreement with Origin, as announced by NZEC June 17. Once the conditions precedent have been met and both the TWN Joint Venture and the Waihapa Assets Acquisition are complete, NZEC and LME will each own 50 percent of the TWN Licenses comprising 23,049 acres in the Taranaki Basin of New Zealand’s North Island. NZEC and LME will also each hold a 50 percent interest in the Waihapa Production Station and associated oil and gas gathering and sales pipelines and other infrastructure associated with the TWN Licenses and the Waihapa Production Station.
“I have been watching this transaction unfold with interest,” said Geoff Loudon, owner of LME. “I have long believed that the TWN Licenses and infrastructure hold great potential, both from an exploration perspective and with the strategic marketing and business opportunities presented by the Waihapa Production Station. I look forward to unlocking the value of these assets in partnership with NZEC.”
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