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PERTH (miningweekly.com) – ASX-listed Central Petroleum has signed a deal with independent oil and gas explorer Magellan Petroleum to acquire its onshore Australian assets for A$35-million.
The assets include the Palm Valley and Dingo fields, near Alice Springs, as well as in-place compression, processing and transportation infrastructure, four producing wells at Pal Valley and two existing wells ready for production at Dingo.
Central reported on Wednesday that the payment would consist of a A$20-million cash component, as well as some 39.5-million shares in Central. The company would issue the shares and pay an initial A$15-million of the cash component immediately, while the balance of the cash component would be paid on April 15.
“The acquisition provides Central with infrastructure and production revenues, and synergies between its Surprise production and Palm Valley production, which can also be used to support any exploration success in the future,” said Central MD Richard Cottee.
He noted that as part of the acquisition, Central would be offering employment to the Magellan Petroleum staff at the projects.
Cottee said that the agreement created a step-change for Central by providing the means to shift from explorer to multi-field producer in both oil and gas markets.
“This is an exciting phase of our company’s development in the interest of our shareholders, the Northern Territory and the traditional owners of Central Australia.”
The cash component of the transaction would be funded through a loan facility with Macquarie Bank.
The facility comprises A$20-million for the acquisition and a further A$30-million for the development of the Dingo field and the construction of a 50 km export pipeline to Alice Springs, in order to service a gas sale contract with the Power and Water Corporation, in the Northern Territory.
The bank facility requires Central to grant 15-million unlisted options to Macquarie, six-million of which would be granted on completion. The options would have an exercise price of 50c each, and an exercise period of 30 months.