Antares Energy To Sell Turkish Subsidiary
Antares Energy has signed an agreement with Zorlu Petrogas for the sale of 100% of the share capital of its wholly-owned subsidiary, Amity Oil International Pty Ltd, the principal asset of which is a 50% interest in the Thrace Joint Venture in Turkey which contains the Gocerler, Adatepe and Cayirdere gas fields. Zorlu is a subsidiary of Zorlu Energy, Part of the Zorlu Group. Zorlu Energy is a large Turkish Company with varied interests in the power generation and energy related businesses.
Upon completion, Antares Energy will receive a cash consideration of USD 40.4 million, equivalent to AUD 53.9 million which includes USD 9.8 million of working capital held in the subsidiary.
An additional US $4.4 million (AUD 5.9 million) may also be paid to Antares Energy if the drilling of nominated exploration prospects results in discoveries over the 24 month period following completion of the sale.
Antares Energy (then Amity Oil Limited) entered into the Thrace Joint Venture with the Turkish State oil company, TPAO, in 2000. Later in that year the first exploration well was drilled on the Gocerler prospect and was a discovery. Plant and pipelines were built and the first gas from the field was sold in early 2002. In 2003, the Adatepe and Cayirdere fields were discovered in the joint venture permits. Gas processing facilities were built and these fields were quickly brought into production.
To June 30, 2005, a total of approximately 17 Bcf and 90,000 bbls of condensate have been produced from the three fields.
In addition to the four permits that are part of the Thrace Joint Venture area, Amity Oil International also holds 100% of four other permits in the Thrace region.
Since 2004, Antares Energy has communicated to the market that its strategy for growth was now firmly focused on the USA. The market has embraced this strategy and encouraged the company to accelerate the strategy where possible.
A significant portion of the funds raised by the sale will be used in exploration for high impact gas and oil exploration in the United States.
Antares has executed an agreement for the sale to Zorlu of 100% of the share capital of Amity Oil International Pty Ltd, a wholly-owned subsidiary. The principal asset of this subsidiary is a 50% interest in the Thrace Joint Venture in Turkey which contains the Gocerler, Adatepe and Cayirdere gas fields. Upon completion, Antares will receive cash consideration of USD40.4 million, equivalent to AUD 53.9 million which includes USD 9.8 million of working capital held in the subsidiary. In addition to the immediate funds, the agreement allows Antares to gain up to an additional US$4.4 million over the next 24 months if additional nominated exploration prospects are successful discoveries.
Both parties are aiming to complete the sale by September 9, 2005.
All of Antares Energy's interests in Turkey are held through Amity Oil International Pty Ltd. Once the sale is completed, Antares Energy will hold no direct interests and have no commitments in Turkey other than the additional US $4.4 million being received upon the abovementioned successful exploration by Zorlu.
Following the sale, Antares Energy intends to use a significant proportion of the sale proceeds to fund its ongoing business activities of exploration, development and operation of oil and gas assets including:
- accelerating high value exploration and development opportunities in the United States including seismic based exploration onshore south Texas and Oklahoma.
- bringing forward planned new exploration drilling in the shallow water Gulf of Mexico,
- seek to acquire other production assets and new exploration plays as suitable opportunities arise.
Antares has an active new ventures program, currently focused in the US, which is directed at replacing and surpassing the Turkish production through new discoveries and developments.
Commenting upon the transaction with Zorlu, Antares' Managing Director, Howard McLaughlin, stated that::
"The discovery, development and production of the three gas fields in Turkey were significant steps in Antares' growth from a junior explorer into an international producer. Essentially, the sale of the Turkish fields accelerates the cashflow and profits that Antares eventually would expect to have received from that asset over time, but very importantly, the sale proceeds would represent a monetization of the asset that additionally delivers a significant profit over the asset's book value.
The ability to capitalize the full value of the Turkish assets in this way provides Antares with the financial capacity to more aggressively pursue its ambitious US growth strategy. Investors can be confident that all new ventures will have been through rigorous analysis before committing shareholder funds to ensure that the risks are appropriate to the potential reward.
This sale is a good example of Antares' management of its portfolio on a purely economic basis. Under Antares' strategy, assets will move in and out of the portfolio depending on their contribution to returns and strategic importance, both now and in the future. If a third party is prepared to buy an Antares asset and the price meets or exceeds our internal valuation then it will be sold."
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