Oilex to Exit Australia in Asset Sale

Oilex Ltd. has struck an agreement with Armour Energy Ltd. for the sale of all its interests in the Cooper-Eromanga Basin in central and northern Australia. Under the deal terms Armour will acquire 100% of the issued capital of CoEra Ltd., a subsidiary of Oilex. At closing, CoEra will own all Oilex's direct and indirect interests in the basin including a:

• 79.33% direct interest in two Petroleum Exploration Licenses (PEL 112 and PEL 444) with an option to acquire the remaining 20.66%; and

• the right to acquire 27 Petroleum Retention Licenses from Senex Ltd. (Northern Fairway PRLs)

"The board has pursued many options to achieve value for our shareholders without the associated funding burden and consequential dilution during these difficult industry conditions,” Oilex managing director and incoming executive chairman Joe Salomon said in a written statement. “Importantly, [the transaction] allows the company to focus on its core assets in India and expand its portfolio in the UKCS which we look forward to progressing."

As consideration for the proposed transaction, Armour will issue up to 34.5 million Armour shares to Oilex at closing in two tranches. Based on the closing price of an Armour ordinary share on May 26, Tranche 1 is worth A$710,000 and Tranche 2 is worth up to A$290,000. In addition, within 60 days from closing, Armour will reimburse Oilex, in cash, for past costs of A$125,000.

The company will nominate up to 3.45 million shares (10%) of these shares to Orthogonal Enterprises Pty Ltd.  for past and future services rendered in building the Cooper-Eromanga portfolio.

As of year-end 2019, Oilex’s Cooper-Eromanga assets had an unaudited carrying value of A$331,000, according to the company.

To contact the author, email bertie.taylor@rigzone.com.