US company Camac Energy has entered into a definitive agreement to acquire the remaining economic interests in the production-sharing contract for Nigerian offshore oil mining leases 120 and 121 to give it 100% ownership.

The agreement included the acquisition of the currently producing Oyo field from Camac Energy’s largest shareholder Camac Energy Holdings Limited’s (CEHL’s) wholly owned subsidiary Allied Energy. The Oyo field was currently producing 2 000 bbl/d of oil.

“With 100% economic ownership of our high-impact, deep-water offshore assets, we will be well positioned to pursue our goal of producing 14 000 bbl/d of oil once Oyo-7 and Oyo-8 are completed next year,” Camac Energy chairperson and CEO Dr Kase Lawal said.

To acquire the interests, Camac Energy would issue 497 454 857 shares of common stock, pay $170-million in cash and issue a $50-million convertible subordinated note.

To fund the cash portion of the transaction with Allied and a portion of expected capital expenditures for development of the Oyo Field, Camac Energy also announced on Wednesday that it had entered into a definitive agreement with South Africa's Public Investment Corporation (PIC) for a $270-million equity investment through a private placement of 376 884 422 shares of common stock, representing an about 30% ownership interest in Camac Energy after completion of the transactions.

In connection with the investment by the PIC, the company has agreed to list its common stock on the JSE.

“These transactions are subject to stockholder and regulatory approvals and are each conditional upon the closing of the other transactions and listing on the JSE,” the company stated.

“The Allied acquisition, investment by the PIC and secondary listing on the JSE will completely change the complexion of our company, and we look forward to beginning 2014 as a stronger organisation with increased production, revenues and scale,” Lawal said.

He added that being dual-listed on the NYSE and JSE would provide increased liquidity and transparency for the company’s shareholders.

Meanwhile, to achieve the post-closing share ownership percentages negotiated between the parties, the agreement with Allied also required the company to declare a dividend in the form of additional shares of Camac Energy common stock, equal to about 1.435 shares a share outstanding.

The declaration of the stock dividend would not occur if the conditions to the transactions were not fulfilled.  

As a result of the Allied and PIC transactions and the issuance of shares pursuant to the anticipated stock dividend, Allied and CEHL will own about 56.97% of the outstanding common stock of the company, PIC will own about 30% and the existing public stockholders of Camac Energy – not affiliated with Allied or CEHL – will own about 13.03%.

The percentages excluded the 69 793 411 shares into which the subordinated note will initially be convertible.

“This strategic acquisition is a transformational event for our company and significantly increases our current production and cash flow.  With this acquisition, we will be transitioning our company from a minor economic-interest holder into a significant growth platform, targeting the prolific Pliocene and Miocene reservoirs in this region,” Lawal added.

The transactions were expected to take effect in the first half of 2014.