Otto Energy has executed a deal with Nido Petroleum to sell Galoc Production Company (GPC), the holder of Otto’s 33% stake in the Galoc oil field, located in Service Contract 14 C1 offshore the Philippines.
To remind, Otto Energy on September 22, 2014 said it had executed a sale and purchase agreement to divest 100% of the shares in Galoc Production Company WLL (GPC) to Risco Energy Investments Pte Ltd (Risco) for US$101.4m.
However, Otto has said today that it has now executed a “superior sale and purchase agreement” with Nido Petroleum Limited to divest GPC for US$108m (~A$130m) on the same terms and conditions as the Risco SPA.
Otto Chief Executive Officer, Matthew Allen, said, “This superior proposal is very advantageous and beneficial to Otto shareholders. It further reinforces Otto’s financial robustness and ability to successfully return value to shareholders, and deliver our future exploration plans and growth strategy whilst maintaining a sound balance sheet. Otto is focussed on executing its high impact exploration programme in both the Philippines and onshore East Africa in the coming two years.”
According to Otto, Risco has waived its right to match the Nido sale and purchase agreement (Nido SPA) and the Risco SPA has been terminated. Risco had offered US$101.4 million for the proposed GPC acquisition.
“The acquisition will increase Nido’s production base to more than 4,000 barrels of oil per day.”
Under the agreement, Nido has agreed to pay Otto US$108m (~A$130m) as at 1 July 2014. Nido has paid a US$1m deposit, with a further US$9.8 million to be paid within 10 business days. Nido will assume all production rights and liabilities associated with the Galoc Interest (including abandonment costs) with effect from 1 July 2014.
Shareholders to decide
Similar to the terminated Risco transaction, completion of the Nido transaction is conditional on Otto shareholder approval. Otto will issue a Notice of Meeting seeking shareholder approval for the transaction,with a General Meeting to be held in January 2015.
If Nido’s offer is successful, the company’s interest in the Galoc oil field will increase to 55.88 per cent and it will assume operatorship of the project. The acquisition will increase Nido’s production base to more than 4,000 barrels of oil per day.
Nido’s Managing Director Philip Byrne said: “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’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.”
Offshore Energy Today Staff