New Guinea Energy Ltd (NGE/Company) announced Thursday that NGE and its wholly owned subsidiary, Kirkland Limited (Kirkland) have signed an agreement with a subsidiary of Santos Limited, Barracuda Limited (Santos), regarding the proposed sale of Kirkland’s 50 percent participating interest in Petroleum Prospecting Licence 269 (PPL269) in Papua New Guinea (PNG) to Santos for a maximum total consideration of up to $40 million (Sale Agreement). NGE has guaranteed Kirkland’s obligations under the Sale Agreement.
The consideration for the sale of the 50% interest in PPL 269 includes:
Completion of the sale of Kirkland’s 50 percent interest in PPL269 under the Sale Agreement is conditional on receipt of certain government approvals, some of which must be satisfied within 6 months of the execution date. The Sale Agreement also contains a number of conditions which must be satisfied within 6-9 months of the execution date, including that the variation to PPL269 submitted March 11, 2013 is approved by the Minister and that Santos executes an on-sale agreement under which it will on-sell a portion of the 50 percent participating interest being acquired from Kirkland (On-Sale Agreement). Completion of the sale of Kirkland’s participating interest to Santos is conditional on all of the conditions under the On-Sale Agreement being satisfied.
Under the Sale Agreement, Santos has agreed to fund Kirkland’s participating share of expenditure under certain pre-approved Work Programs and Budgets. Kirkland will not be liable to repay any funds advanced by Santos in relation to this expenditure other than in very limited circumstances.
A timetable of the latest dates for the implementation of the transaction is:
The Company has received the consent of the holders of the convertible bonds on issue to enter into and complete the Sale Agreement, and the Company will repay all outstanding monies in relation to the convertible bonds following receipt of the sale consideration. Using the Feb. 12 exchange rate of AUD 1/$0.9057, the likely effect of the payment on Completion will be to increase the Company’s net assets by $8.15 million (AUD 9 million). A more detailed description of the impact on the Company’s finances is provided as an Appendix to this announcement.
NGE CEO, Grant Worner commented:
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