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Norwegian oil and gas operator DNO ASA has entered into a $117.25 million deal under which RAK ​​Petroleum will transfer its ownership of Mondoil Enterprises to DNO.
The all-stock transaction includes Mondoil Enterprises’ indirect 33.33% interest in the privately held Foxtrot International LDC, whose principal asset is an operating stake in the production of natural gas and related liquids offshore Côte d’Ivoire, establishing DNO’s interest in West Africa. bridgehead.
Transaction, effective January 1, 2022, involves the transfer of 100% of Mondoil Enterprises’ equity valued at $95 million, including a 9.09% indirect working interest in Block CI-27 and an 8% interest in Foxtrot International in Block CI-12 , and $22.25 million, including $21 million in cash and $1.25 million in working capital.
stock issue
DNO will issue 78,943,763 shares at a price of NOK 14.38 ($1.46) as consideration. Share prices are based on DNO’s dividend-adjusted weighted average share price for the 15 trading days prior to the date of the deal agreement and the average USD/NOK exchange rate reported by Norges Bank for the same period.
“As DNO aims to expand into Iraq and the Kurdistan region of the North Sea, the foray into Côte d’Ivoire is an important first step towards a highly promising region offering extensive growth opportunities through the acquisition of producing fields, development assets and exploration licenses, said Bjørn Dale, managing director of DNO. He added that the company is already evaluating other opportunities in the region.
Foxtrot International holds a 27.27% interest and operating rights to the CI-27 block offshore Côte d’Ivoire, which has the largest natural gas reserves in the country, along with condensate and oil, from four offshore connected to two fixed platforms Oilfields that meet more than three-quarters of the nation’s natural gas needs.
Foxtrot International also operates an exploration license in Block CI-12 offshore Côte d’Ivoire, holding a 24% interest.
gas field work
In addition to the Foxtrot field, which started production in 1999, block CI-27 includes the Mahi field, which was developed in 2012, and the Marlin and Manta fields, which began production in 2016, following a four-year, $1 billion development initiated by the joint venture Activity.
Under a natural gas sale (take or pay) agreement that came into effect in June 1999, natural gas produced from these fields is piped to a fuel-fired power station in Abidjan and subsequently increased to a benchmark price of US$6.00 per MMBtu per day at 140 million cubic feet per day, The current price is raised to $6.47 per MMBtu according to the index formula.
In early 2020, the CI-27 block joint venture began a two-year, $350 million field development and onshore facility construction project with the signing and extension of the production sharing contract and gas sales agreement through 2034. Supply of natural gas to two new power stations.
funds from cash flow
Cash flow from operations funded these capital investments. The work is nearing completion with the drilling of three new wells and two sidetracks; the final well in the program, the sidetrack, is currently underway.
Depending on power sector demand and well performance, this additional processing and well capacity is expected to add more than 230 million cubic feet per day of natural gas supply. Two more wells are planned to be drilled during the extension period to maintain the higher production capacity of the license. In the first half of 2022, sales averaged 200 million cubic feet per day of natural gas and 1,500 barrels of oil and condensate. Oil and condensate (and a limited amount of natural gas) are sold to local refiners at fair prices.
As further announced by RAK Petroleum, the transaction is subject to RAK Petroleum’s distribution of its DNO stake, including the consideration shares, to its shareholders in repayment of capital. This process is expected to be completed by October 2022.
DNO will receive 26,269,183 of its own shares from its 5.1% stake in RAK Petroleum, which will be retained as treasury shares.
shareholder approval
Completion of the transaction is subject to a resolution by shareholders at the DNO EGM approving the issue of consideration shares. A formal notice of the DNO Extraordinary General Meeting to be held on September 13, 2022 is attached with further information on the procedure and a description of the terms and conditions of the transaction agreement.
RAK Petroleum will also hold an extraordinary general meeting to seek shareholder approval for the capital repayment plan.
DNO performed due diligence on the assets to be acquired with the support of a third-party assessment of reserves and resources. The transaction has been negotiated by independent members of DNO’s board of directors, who, in addition to the attractive business advantages, considered the advantages of increasing the company’s free float to attract institutional investors and increasing DNO’s natural gas exposure to reduce its carbon footprint . Pareto Securities AS has been engaged as financial advisor to the DNO and has provided an impartial opinion to the independent directors.
PricewaterhouseCoopers has issued an independent expert statement pursuant to section 10-2 of the Norwegian Public Limited Company Act, see section 2-6, confirming that the value of Mondoil Enterprises is at least equal to the value of the Consideration Shares. — arab trade news agency
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