PERTH (miningweekly.com) – ASX-listed Nido Petroleum has launched a $108-million takeover offer for fellow-listed Otto Energy’s 33% interest in the Galoc oil field, in the Philippines.
Nido said on Friday it would pay a $10.8-million deposit for Otto’s subsidiary Galoc Production Company, which owns Otto’s share in the Galoc oil field, and would assume all production rights and liabilities, with effect from July 2014.
The Otto board has backed Nido’s offer for its interest in the Galoc project, claiming it superior to a September $101.4-million offer received from Risco Energy Investments.
Otto CEO Matthew Allen said on Friday that the Nido proposal was advantageous and beneficial to the company, and further reinforced Otto’s financial robustness and ability to successfully return value to shareholders and to deliver on future exploration plans.
The Galoc project covers about 163 km2 of tenements offshore the Philippines, and production was currently taking place from four wells, at an average of 8 387 bbl/d.
If Nido’s offer was successful, the company’s interest in the Galoc oil field would increase to 55.88% and it will assume operatorship of the project. The acquisition would increase Nido’s production base to more than 4 000 bbl/d.
“Acquiring Otto’s stake in Galoc is a logical growth opportunity for Nido and one that fits neatly with the strategy Bangchak communicated upon taking majority ownership of the company earlier this year,” Nido MD Philip Byrne said.
“Nido’s increased participating interest and appointment as operator will also put the company in a controlling position as the joint venture moves forward towards a further potential expansion of the Galoc oil field. We look forward to building on our role as a consolidator in the South-East Asian oil and gas sector.”
Nido said it intended to fund the acquisition through a combination of existing cash reserves and debt. As part of the funding arrangements, Nido’s major shareholder Bangchak Petroleum Public Company, has committed to providing Nido a revolving debt facility on an arm’s length basis in order to provide Otto shareholders certainty of funding for the offer.