Salamander has signed a non-binding HoA with SONA to sell an effective 40% working interest in both the B8/38 concession,containing the Bualuang Field in the Gulf of Thailand, and the surrounding G4/50 concession for a total cash consideration of US$280 million.
SONA is a special purpose acquisition company (“SPAC”) listed on the Malaysian stock exchange formed by a group of experienced senior executives from the oil and gas industry targeting the acquisition of upstream assets in SE Asia and elsewhere.
Under the terms of the Transaction SONA will pay Salamander US$250 million for a 40% effective interest in the B8/38 concession. Also, SONA will pay Salamander US$30 million for a 40% effective interest in the G4/50 exploration concession
Furthermore, Salamander will carry SONA’s costs associated with the drilling of two exploration wells in the G4/50 concession up to an agreed cap. SONA will also pay Salamander a contingent cash payment in the event of a commercial discovery in G4/50 of up to $15 million.
As at 31 December 2013, Salamander’s estimated gross Bualuang Field 2P reserves were 32.7 million barrels of oil (“MMbo”) and gross 2C resources were 32.3 MMbo.
The Transaction has an effective date of 1 January 2014 and following its successful completion, the Board has approved a US$50 million capital return to shareholders, equivalent to approximately 11 pence per share. Post closure of the Transaction, and ahead of the next phase of development of the Bualuang Field, the Group expects to retire between
$200 million and $250 million of current debt.
The HoA remains subject to, amongst other things, the signature of final documentation, including share sale and purchase and shareholders’ agreements, which is anticipated to occur prior to the end of June. The Transaction is expected to close by the end of Q3 2014 following satisfaction of all
conditions, including receipt of both regulatory and shareholder approvals of both Salamander and SONA.
James Menzies, CEO of Salamander, commented: “Our Bualuang field and surrounding acreage has proved to be a highly successful growth asset for Salamander. The Group’s hub strategy is designed to bring assets to phased maturity, releasing value in turn and providing for both re-investment in early stage development and capital return.
The price achieved reflects the quality of Bualuang barrels, and the prospectivity of the G4/50 acreage which surrounds the Bualuang Field.
Today’s announcement demonstrates the value embedded in the Group’s portfolio, and the Transaction provides an excellent opportunity to crystallise a portion of that value.”