Canada's Pan Orient Energy Corp. (Pan Orient or the Company) announced Wednesday that it has entered into an agreement for the sale of a 50 percent equity interest in subsidiary Pan Orient Energy (Siam) Ltd. to a wholly owned subsidiary of Sea Oil Public Company Limited (Sea Oil) of Bangkok, Thailand, for a cash price of $42.5 million (CAD 48.3 million), including a working capital adjustment of $2.4 million (CAD 2.7 million). Pan Orient Energy (Siam) Ltd. holds Pan Orient's 100 percent interest in Concession L53/48 in Thailand and will remain as the operator.
The transaction is anticipated to close on or about Jan. 12, 2015. The sale and purchase agreement contains customary representations, warranties, covenants and indemnities in favor of Sea Oil. Closing is subject to Sea Oil shareholder approval (at a meeting scheduled for Dec. 17), financing, certain regulatory and other third party approvals and waivers, as well as other customary closing conditions. A $4 million break fee is payable by Sea Oil if shareholder approval or financing is not obtained. It is anticipated that net proceeds to Pan Orient, after closing adjustments, a 3 percent finder's fee, tax and other costs, will be approximately $40.9 million (CAD 46.5 million). A two appraisal well and one exploration well drilling program in Concession L53/48 is expected to commence shortly after closing in January 2015.
Pan Orient President and CEO Jeff Chisholm said "Pan Orient continues to make significant progress towards the corporate initiative of strengthening the Company's balance sheet and de-risking its portfolio of assets, through partial sale or seeking partners. The final goal is to retain meaningful working interests with significant upside exposure and a strong balance sheet, facilitating growth and flexibility going forward. In addition to the sale of a 50 percent interest in the Thailand L53/48 asset announced today, the Company has also entered into exclusive negotiations and made significant progress towards the signing of farmout agreements for the East Jabung production sharing contract (PSC) and Batu Gajah PSC in Indonesia and hopes to finalize these negotiations in November. The Company has also been actively engaged with a third party working towards concluding a farm-in agreement on the Citarum PSC in Indonesia."
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