Magellan Sells Australia's Mereenie Field Bonus Rights to Macquarie Bank
Magellan Petroleum Corporation (Magellan or the Company) reported Thursday the sale to Macquarie Bank Limited (Macquarie) of all the Company's rights to certain bonus payments related to the Mereenie field located in the Amadeus Basin in Australia for a purchase price of $2.5 million (AUD 3.45 million).
On May 18, Magellan entered into and completed a Sale and Purchase Deed with Macquarie to sell to Macquarie all the Company's rights to certain bonus payments, which bonus payments are i) based upon sales of hydrocarbons from the Mereenie field ranging from 2,500 barrels of oil equivalent per day (boepd) to 10,000 boepd and ii) may range from $3.6 million (AUD 5.0 million) to cumulative potential payments of $12.7 million (AUD 17.5 million) (the Mereenie Bonus) for a purchase price of AUD $2.5 million (AUD 3.45 million).
J. Thomas Wilson, president and CEO of the Company, commented, "This transaction represents another important step in the strategic alternatives review process we are engaged in and should provide sufficient liquidity to complete this process. We believe that the purchase price is attractive to the Company in light of i) the current estimated production from Mereenie, which the Company believes is less than 1,000 boepd, ii) the structure of the Mereenie Bonus, which require sales of hydrocarbons from the Mereenie field to attain 10,000 boepd in order to trigger the final bonus payment of $7.5 million (AUD 10 million) out of the cumulative potential payments of $12.7 million (AUD 17.5 million), iii) the uncertainties related to the timing and financing of a development plan of Mereenie to enable increased production from the field, and iv) the uncertainties related to the ability to execute new sale contracts of hydrocarbons in the current energy market environment. Finally, the Mereenie Bonus was not recorded in the Company's condensed consolidated financial statements.
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