Ener Petroleum Completes Jotun Transaction
Ener Petroleum has completed the acquisition of the 50% holding in PL 027B including a 45% holding in the Jotun field from Enterprise Oil Norge AS, a subsidiary of A/S Norske Shell. The transaction is Ener's initial entry into the Norwegian Continental Shelf and will secure the company around 15 million barrels of recoverable reserves from the Jotun field in addition to 19 million barrels of risked exploration resources in the license. ENER has forecasted its average net production from the Jotun field to around 7,000 barrels of oil equivalents per day for 2007.
The acquisition is a considerable achievement for Ener and an excellent building block for the company's future expansion.
On July 14th Ener Petroleum announced that it had entered into a sale and purchase agreement with Enterprise Oil Norge AS ("Shell") to acquire Shell's 50% share of Production License 027B on the Norwegian Continental Shelf including a 45% interest in the unitized Jotun field. The agreement was effective as of 1 st January 2006 and was subject to consents from the Ministry of Petroleum (MPE) and Energy and Ministry of Finance (MoF).
Ener has now received consents from both MPE and MoF and that the formal completion for the transaction took place today, whereby Ener became the formal holder in PL 027B and a Jotun Unit partner.
The asset containing the PL 027B license including the Jotun Unit is acquired for a purchase price of US $56.6 million with effective date January 1, 2006. The purchase price includes Ener taking over Shell's financial tax positions related to the acquired assets, i.e. Shell's gain and loss account connected to the sale in 2005 of the Jotun A production vessel and the unused portion of Shell's tax depreciation and uplift. This is effectively considered as a long term funding to Ener. The purchase price is settled by a combination of a 2006 net cash flow pro & contra settlement, and an acquisition funding of USD 36 million arranged by Standard Bank plc.
Ener's share of remaining reserves in the Jotun field as of effective date January 1 2006 are by Ener estimated to around 15 million BOE (P1 + P2) of which approximately 2.0 million BOE are expected to be produced during 2006.
Ener's share of unrisked petroleum resources (prospects and leads not drilled) is by Ener estimated to more than 70 million BOE in the license. According to Ener's internal evaluation of probability of discovery for each prospect and lead, Ener's total risked P50 resources are estimated to around 19 million barrels of oil. Any discoveries are expected to be developed utilizing the Jotun A production unit.
Mr. Per Gunnar Loge, CEO of Ener says: "Through this transaction Ener has acquired about 15 million barrels of recoverable oil equivalents of which more than 90% of the reserves are oil, as well as a portfolio of attractive exploration opportunities. Present production levels on Ener's hand are around 6,500 BOE per day.
Ener has its focus on enhanced recovery from fields in production and selective exploration efforts in areas near existing infrastructure. It is our view that the recovery from the Jotun field can be increased further through infill drilling and that the production license in addition has several major unexplored prospective structures that could be exploited using the existing infrastructure on the Jotun field. The field is operated excellently by ExxonMobil and we are looking forward to contributing to focusing even further on the substantial exploitation potential of the entire Jotun area.
This acquisition achievement represents a huge leap for Ener towards becoming a material player on the Norwegian Continental Shelf. Through this acquisition we have met our first milestone since the Ministry of Petroleum and Energy's prequalification of the company as a licensee in March 2006. Acquiring PL 027B and Jotun is in accordance with Ener's business strategy and objectives as earlier communicated to the investor market.
The Jotun acquisition will give Ener a solid foundation to build and expand its future activities on the shelf."
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