Australia's FIRB Clears Armour Energy's Farm-out of Stakes to AEP for $130M

Armour Energy Ltd. reported Wednesday that American Energy Partners LLP (AEP) has received Foreign Investment Review Board (FIRB) approval for AEP’s proposal to acquire a 75 percent interest in Armour’s McArthur Basin oil and gas project in the Northern Territory (Project) and up to a 15.95 percent interest in Armour Energy. The proposal relates to AEP’s investment of up to $130 million (currently approximately AUD 185 million) over a five year period in return for the 75 percent interest in the Project.

The FIRB approval received to date is a further step towards closing of the Agreements with AEP on the Project. Closing can take place at any time up to Jan. 9, 2016 at which point AEP will pay Armour $13 million (approximately AUD 18.43 million).

Under related agreements, AEP will also subscribe a further $2.74 million (AUD 3.75 million) for Armour shares at $0.1462 (AUD 0.20) per share on the closing of the Farm in Agreements, adding to AEP’s existing 5 percent investment in Armour at an initial price of $2.74 million (AUD 3.75 million), completed Nov. 4, giving AEP a combined 10 percent interest in the Company. At that stage AEP will also be entitled to 24 million options to subscribe for further shares in Armour. The allotment of these options has also received FIRB approval.

Under the proportional bid to be made by AEP for 13.62 percent of Armour at $0.1826 (AUD 0.25) per share, AEP will be entitled subject to the level of acceptances received to gain up to a 20 percent shareholding interest in the Company. AEP will then nominate a Non-Executive Director to the Board of Armour.

About AEP and Armour Energy

American Energy was created by Aubrey McClendon after the success of the US shale gas development and production pioneer Chesapeake Energy LC. AEP has raised over $15 billion for unconventional oil and gas development and has adopted a strategy of foreign endeavours to identify and explore new petroleum provinces on a massive scale. The McArthur Basin is highly rated as a comparable prospective basin with units similar to the Utica and Marcellus Shales in the north eastern US. Application of AEP driven development and extractive technologies are expected to unlock a large and productive petroleum province on Armour’s ground in the McArthur Basin.

Armour is the largest land holder in the Northern Territory with 29 million acres under permits. The Company also holds a 100 percent interest in a further 5 million acres over the South Nicholson Basin in Queensland. Armour’s Proterozoic Basins are believed to have once formed part of a trans-global belt of oil prone basins that host oilfields in excess of 50 billion barrels of oil reserves in Siberia southern China and Oman.

Armour has recently acquired the Roma shelf project from Origin Energy and is engaged in the recommissioning of oil and gas production from this prolifically endowed oil and gas region. Armour also holds an 18 percent interest in ASX-listed Lakes Oil NL and joint venture interests with Lakes Oil over onshore license areas over the Otway and Gippsland Basins in Victoria. While these areas are currently subject to an exploration moratorium, they are expected to ultimately become accessible.


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