Ithaca Energy Inc. has entered into an agreement to sell its wholly owned subsidiary, Ithaca Petroleum Norge AS (Ithaca Norge), for an initial consideration of $60 million.
The company also has the ability to earn additional bonus payments of up to $30 million dependent on exploration success from the existing licence portfolio.
Pursuant to the agreement, Ithaca Norge will be acquired by MOL Nordsjon B.V., a wholly owned subsidiary of the Hungarian listed company MOL Plc. The transaction has an effective date of January 1, 2015 and is expected to complete in the third quarter of 2015.
Upon completion, the company says that the transaction will conclude Ithaca’s restructuring and monetisation of the Norwegian operations acquired as part of the acquisition of Valiant Petroleum plc in April 2013.
After repayment of the company’s Norwegian exploration financing facility and forecast working capital adjustments, the sale is anticipated to result in an initial net cash receipt of approximately $30 million, which will be used to offset drawings under the company’s existing bank debt facility.
The potential future bonus payments depend on successful discoveries being drilled on Ithaca Norge’s existing licence portfolio between 2015 and 2017, with any payments based on a sliding scale depending on discovery size.
The transaction is subject to the approval of the Norwegian Ministry of Petroleum and Energy.
Les Thomas, Chief Executive Officer, commented: “The team has done an excellent job in restructuring the Norwegian business following its acquisition as part of the Valiant transaction in 2013. The sale provides Ithaca with the right opportunity to now monetise the value of this non-core part of the Company while retaining upside exposure to the anticipated drilling programme over the next two years.”