Interoil announces proposed acquisition of an additional participation in Santa Cruz concessions
09 Mayo 2023 - 12:30PM
Interoil announces proposed acquisition of an additional
participation in Santa Cruz concessions
Oslo, 9 May 2023
Interoil Exploration and Production ASA (the "Company" or "IOX")
is pleased to announce the execution of a binding term sheet (the
"Term Sheet") whereby Interoil and the Argentine company Selva
María Oil S.A. (“SMO”, and with Interoil each a “Buyer” and
together the “Buyers”) undertake to acquire from Echo Energy Plc
(“Echo”) and its subsidiaries Eco Energy CDL OP Ltd. and Eco Energy
TA OP Ltd. (both such subsidiaries together with Echo, the
“Sellers”) (i) 65% of the aggregate interest and assets in and to
five exploitation concessions located in the Province of Santa
Cruz, Argentina, namely CA-1 “Campo Bremen”, CA-4 “Moy Aike”, CA-6
“Chorrillos”, CA-10 “Palermo Aike” and CA-9 “Océano” (the
“Exploitation Concessions’), and the related joint venture, as well
as (ii) a 95% interest in and to the transport concession (the
“Transport Concession”) owned by Echo on the Océano area (the
“Transaction”, and the interest and assets contemplated thereunder,
the “Target Interest and Assets”). The Company already owns 8.34%
in the Exploitation Concessions and the related joint venture
serving as operator thereunder. SMO served as operator of the joint
venture immediately prior to the appointment of Interoil as
operator.
Subject to final negotiations and adjustments among the parties
as to the participating interest to be eventually acquired by each
Buyer, Interoil is expected to receive approximately a third of the
Target Interest and Assets, which would represent approximately a
22.00% direct interest in the Exploitation Concessions and related
joint venture (which when added to the 8.34% working interest that
IOX already holds in such concessions and joint venture would made
an aggregate of slightly more than 30% working interest for IOX).
Under such scenario, and considering that the current joint
venture’s daily production amounts to approximately 2000 boepd,
upon completion of the Transaction, IOX would be adding
approximately 440 boepd to its aggregate equity portfolio which
would increase to a total of approximately 1100 boepd.
On completion of the Transaction, Sellers will retain a 5%
working interest in the Exploitation Concessions, related joint
venture and the Transport Concession, and will be vested with an
option to buy another 5% back from Buyers.
The Transaction shall be subject inter alia to Sellers’
shareholder approval, and it will contemplate aggregate
consideration to be paid by the Buyers for the purchase of the
Target Interest and Assets, as follows:
- A cash consideration of £825,000, payable by means of an
upfront payment of £75,000 upon execution of the transaction
documents (expected to occur within a week from the Term Sheet),
and the balance of £750,000 payable at Completion (expected to
occur 30 calendar days from the Term Sheet);
- A payment in kind of £400,000 via transfer to Sellers of IOX
shares at a subscription price of 1.15 NOK per share, to be made
upon Completion;
- An additional contingent payment of up to £400,000 should
production from the joint venture exceed from 4,000 boepd, provided
that such aggregate contingent payment shall not exceed 10% of the
net profits over the production referenced above, after taxes and
investments, obtained by the joint venture as from the moment when
any and all amounts invested by Buyers in the Transaction have been
repaid to Buyers, and aggregate losses of the joint venture have
been balanced with profits; and provided further that any accrual
of contingent consideration shall be fully terminated upon the
elapse of 5 years as from Completion;
- A further contingent payment of £100,000 should production from
the joint venture exceed from 6,000 boepd, provided that such
aggregate contingent payment shall not exceed 10% of the net
profits over the production referenced above, after taxes and
investments, obtained by the joint venture as from the moment when
any and all amounts invested by Buyers in the Transaction have been
repaid to Buyers, and aggregate losses of the joint venture have
been balanced with profits; and provided further that any accrual
of contingent consideration shall be fully terminated upon the
elapse of 5 years as from Completion;
- Furthermore, the Buyers will provide a guarantee to cover
Echo’s remaining 5% interest in the joint venture; and
- Also, as part of the consideration, Interoil shall grant to
Sellers an option to drill an exploratory well at Campo Nuevo
(Maná) Colombia, and to recover twice the cost through a 35% stake
in the production, remaining after such recovery with the right to
10% of production (the “Drilling Option”), as well as a purchase
option over Interoil’s Colombian assets exercisable if Sellers had
exercised the Drilling Option, and after completion and testing the
exploratory well, at consideration amounting to the valuation made
by a recognized international investment bank appointed by the
Buyers.
Additionally, at Completion Buyers will subscribe Echo shares
for an aggregate amount £ 75,000, at a value of 0.065GBP per Echo
share.
Echo will also retain an option to repurchase a 5% interest in
the joint venture and related assets for a consideration of £
100,000 over a 6 month period.
Benefits of Transaction to
Interoil
The proposed Transaction allows Interoil to secure a substantial
increase of its participating interest in the above-mentioned Santa
Cruz Exploitation and Transport Concessions adding a significant
number of boepd to its equity production against a convenient
consideration substantially payable in kind and with limited
dilution. The deal also results in an improvement of the joint
venture ability to carry out actions for production increase
through the incorporation of the former operator of the concessions
as a new member of the joint venture, at the same time reducing the
participation of Echo to an interest that better suits its current
capabilities. The Drilling Option in turn adds opportunities for
new exploration in Colombia with no financial commitment by the
Company.
Echo Shareholders Approval
The Transaction requires approval at an Extraordinary
Shareholders’ Meeting of Echo to be held within 25 calendar days
from the date of execution of the Term Sheet.
Please direct any further questions to: ir@interoil.no
***************************
Interoil Exploration and Production ASA is a Norwegian based
exploration and production company - listed on the Oslo Stock
Exchange - with focus on Latin America. The Company is operator of
several production and exploration assets in Colombia and
Argentina. Interoil currently employs approximately 50 people and
is headquartered in Oslo.
This notice contains information which is considered inside
information pursuant to the European Market Abuse Regulation. The
notice has been published by Mr. Geir Arne Drangeid (Partner and
Senior Advisor, First House AS) at 19:30 CEST on 9 May 2023.
This information is subject to the disclosure requirements
pursuant to section 5 -12 of the Norwegian Securities Trading
Act.
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