07-26-2013, 10:50 AM
NGE TO SELL INTEREST IN PPL 269 FOR US$40 MILLION (AUD$43.7M)
26 July 2013
New Guinea Energy Limited (NGE / Company) is pleased to announce that its wholly owned subsidiary, Kirkland Limited (Kirkland) has signed an agreement with Esso PNG Robin Limited (Esso), a subsidiary of Exxon Mobil Corporation, regarding the proposed sale of its 50% participating interest in Petroleum Prospecting Licence (PPL) 269 to Esso for a total consideration of US$40 million cash (Sale Agreement).
Certain rights and obligations under the Sale Agreement do not become binding until a number of initial conditions precedent are satisfied over a period of 20 business days commencing from today. Esso is permitted to have discussions with the Operator of PPL269 during this period, and has an absolute discretion to determine whether it is prepared to proceed with the acquisition of Kirkland’s participating interest in PPL 269 or not. The initial conditions precedent are: (a) Esso giving Kirkland a notice that Esso wishes to proceed with the transaction; (b) Kirkland obtaining the consent of the holder of the convertible bonds in NGE; and © NGE providing a parent company guarantee to Esso. If the initial conditions precedent are met, Esso will be required to pay a US$4 million deposit to Kirkland. If the initial conditions precedent are not satisfied or waived, the sale of Kirkland’s participating interest in PPL269 to Esso will not proceed.
Using the 25 July 2013 exchange rate of AUD/USD 0.9149, the likely effect of this transaction is to increase the Company’s net assets by $18.25 million. An indicative timetable for the implementation of the transaction and a more detailed description of the impact on the Company’s finances is provided in the full announcement which can be viewed by clicking here.
NGE Chief Executive Officer, Grant Worner commented,
“Receiving $40 million will significantly strengthen NGE’s balance sheet without diluting shareholders’ equity, which is an excellent outcome for the Company and shareholders in a climate where it is difficult for junior explorers to access new funds.
An additional $40 million puts the Company in a terrific position to pursue what we consider to be attractive exploration opportunities. Consistent with the strategy presented at NGE’s 2013 Annual General Meeting, monetisation of this gas asset improves our ability to focus on and fund exploration for oil in Papua New Guinea.
An important component of this strategy is the Kaisy-1 lead near the southern coastline of PNG in PPL 267. NGE believes this target has the potential to contain more than 50 million barrels of petroleum initially in place. With the materiality of this lead and its proximity to water borne transport routes, this target offers an exciting opportunity to significantly change the shape of the Company and to generate near-term production and material revenues.”
Kirkland will continue to pursue its claims in the previously announced arbitration proceedings relating to PPL 269 between Kirkland, Talisman Niugini Pty Limited and Diamond Gas Foreland 269 B.V. (a wholly owned subsidiary of Mitsubishi Corporation) notwithstanding the Sale Agreement between Kirkland and Esso regarding PPL 269.
Should you have any queries, please contact the Company Secretary on +61 2 9252 0010.
Michael Arnett
Chairman
