Nautical Completes Two Acquisitions and Raises Private Equity

Nautical Petroleum has reached agreement and concluded a share purchase agreement with the shareholders and option holders of Alba Resources (Holdings) Limited to acquire 100% of the issued share capital of Alba for US$25.0 million. Completion under the share purchase agreement is expected in early August.

Nautical also today announces that it has reached agreement and concluded a share purchase agreement to purchase 100% of the issued share capital of First Mariner Limited ("FML"), newly incorporated company, from Masefield Energy Holdings AG ("MEHAG") for 3.0 million in new issued shares. Completion under the share purchase agreement is expected in early August.

Nautical Petroleum has today raised 8.0 million through the placing of 88,888,889 new Ordinary Shares at 9p per share. In addition, the Company is to issue 11,666,667 warrants to subscribe for new Ordinary Shares at 20p during the next four years. The Company has the right to require warrant holders to exercise their warrants should the closing price of the Company's ordinary shares remain above 40p for 90 consecutive trading days.

Alba Resources (Holdings) Limited

Payment will be effected by a combination of US$6.0 million in cash and the balance in new ordinary shares in Nautical. The cash portion will be paid in two equal parts, the first payment being made on completion and the second payment being made on or before 31 December 2005. The price formula determining the number of consideration shares to be issued in payment of the US$19.0 million balance is based on the daily closing price for Nautical over a determined period following this announcement. Following the determination of the number of consideration shares to be issued a further announcement will be made.

Management accounts for the five months ended, 31 May 2005, show that Alba made a pre tax loss of 556,293 on net assets of 1,214,665.

The acquisition of Alba materially increases the oil reserve base of Nautical in line with the Company's strategy of securing new reserves through selective acquisitions. Closing this transaction will represent a major growth milestone for Nautical.

Alba holds several license interests on the United Kingdom Continental Shelf ("UKCS") all of which fit the Nautical reserve acquisition plan:

1. A 26.67% interest in the Mariner license block 9/11a

Block 9/11a is the Mariner heavy oil field, in which Chevron owns 44.44% and is the Operator, with the remaining 28.89% owned by ENI. At the option of ENI, Alba may be able to acquire a further 6.67% of the license from ENI under the terms of a contract inherited from the previous owner, Amerada Hess. This would bring Alba's combined interest up to 33.33%.

The Maureen reservoir in block 9/11a is estimated to hold 451 million barrels of oil in place with proven and probable reserves of 82 million barrels. The oil is fully assayed and the quality is very similar to the Nautical 9/2b reserve.

During an extended well test undertaken in 1997, a single horizontal well flowed at an average of 10,000 barrels per day over 63 days. The Maureen reservoir on block 9/11a has been extensively appraised since discovery in 1981, involving 14 penetrations of the reservoir.

Block 9/11a also contains the Heimdal reservoir with an estimated 390 to 710 million barrels in place. This oil is heavier than that in the Maureen reservoir at around 11 API but has been tested from two vertical wells at a rate up to 1840 barrels per day.

2. A 100% interest in block 9/11c

This is adjacent to the Mariner discovery and contains a heavy oil prospect estimated to contain circa 258 million barrels of oil in place. There is no assurance of recoverable oil or clear indication of likely quality. Based on the information currently available, block 9/11c matches the profile of heavy oil prospects which fit the Nautical selection criteria.

3. A 100% interest in block 8/25a

Principally an exploration opportunity, Nautical will make an early assessment of the merits of retaining, farming out or relinquishing its interest.

Two of Alba's directors, John Ure and Robert FitzPatrick, will be employed by the Masefield Group, the majority shareholder in Nautical, and will continue to work towards the development of Mariner and other assets held by Nautical.

First Mariner Limited

MEHAG, a substantial shareholder in Nautical, has a 90% interest in FML, the remaining 10% being beneficially owned by members of the Nautical management group.

MEHAG, a substantial shareholder in Nautical, has a 90% interest in FML, the remaining 10% being beneficially owned by members of the Nautical management group.

The price formula determining the number of consideration shares to be issued in payment of the 3.0 million consideration is based on the daily closing price for Nautical over a determined period following this announcement. Following the determination of the number of consideration shares to be issued, a further announcement will be made.

Alba Resources Limited ("ARL"), an Alba subsidiary, is the owner of the Mariner interest and has a Development Agreement with MEHAG, the terms of which give MEHAG the opportunity to acquire a 50% interest in ARL's share of the Mariner block 9/11a oil field license. ARL has approved the transfer of rights under the Development Agreement to First Mariner Limited, a MEHAG controlled subsidiary. Following the acquisition of FML by Nautical, all obligations and benefits under the Development Agreement will transfer to Nautical.

The Directors (other than Ian Williams, Paul Jennings, Hemant Thanawala and Stephen Jenkins who are connected with the acquisition), who have consulted with Insinger de Beaufort, consider the terms of the acquisition of First Mariner Limited to be fair and reasonable insofar as shareholders are concerned.

In its discussion with the company, Insinger de Beaufort has taken into account the commercial and technical assessments of the Directors of Nautical.

By acquiring First Mariner Limited in addition to Alba Resource Holdings Limited, Nautical recovers the rights held by Masefield Energy holdings AG over block 9/11a. and secures the full 26.7% interest in the Mariner Field. Nautical also has the possibility to increase that interest to 33.33% and gains , in addition, the 100% interest in licenses 9/11c and 8/25a .

Commenting on the transactions, Ian Williams, Chairman of Nautical said:

"In acquiring these two companies, Nautical has gained both new assets and new shareholders. Mariner is an ideal fit with our business strategy and adds significantly to our reserve base and enterprise value. We look forward to playing a constructive role in the future development of the Mariner field."

Steve Jenkins, Chief Executive of Nautical, said;

"The Mariner reserves have been a Nautical target for some time and are a very good fit with Nautical's declared acquisition strategy.

"Once the Alba acquisition is closed, there will be an opportunity to bring forward production participation and move Nautical to earlier oil revenues."

Sevi Guatelli, Alba's Chairman and Managing Director, is pleased with the deal that has been struck with Nautical.

"We have spent several years building up the portfolio of Alba Resources," he says, "and we have developed the business with emphasis on heavy oil, where our expertise lies. We are delighted that Nautical is adding Alba's portfolio of heavy oil assets to their own, and will progress the exploration and production work we have begun. We wish them every success in these endeavors."

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