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announce the execution of a binding term sheet (the “Term Sheet”) whereby
Interoil and the Argentine company Selva María Oil S.A. (“SMO”, and with
Interoil each a “Buyer” and together the “Buyers”) undertake to acquire from
Echo Energy Plc (“Echo”) and its subsidiaries Eco Energy CDL OP Ltd. and Eco
Energy TA OP Ltd. (both such subsidiaries together with Echo, the “Sellers”) (i)
65% of the aggregate interest and assets in and to five exploitation concessions
located in the Province of Santa Cruz, Argentina, namely CA-1 “Campo Bremen”,
CA-4 “Moy Aike”, CA-6 “Chorrillos”, CA-10 “Palermo Aike” and CA-9 “Océano” (the
"Exploitation Concessions’), and the related joint venture, as well as (ii) a
95% interest in and to the transport concession (the “Transport Concession”)
owned by Echo on the Océano area (the “Transaction”, and the interest and assets
contemplated thereunder, the “Target Interest and Assets”). The Company already
owns 8.34% in the Exploitation Concessions and the related joint venture serving
as operator thereunder. SMO served as operator of the joint venture immediately
prior to the appointment of Interoil as operator.
Subject to final negotiations and adjustments among the parties as to the
participating interest to be eventually acquired by each Buyer, Interoil is
expected to receive approximately a third of the Target Interest and Assets,
which would represent approximately a 22.00% direct interest in the Exploitation
Concessions and related joint venture (which when added to the 8.34% working
interest that IOX already holds in such concessions and joint venture would made
an aggregate of slightly more than 30% working interest for IOX). Under such
scenario, and considering that the current joint venture’s daily production
amounts to approximately 2000 boepd, upon completion of the Transaction, IOX
would be adding approximately 440 boepd to its aggregate equity portfolio which
would increase to a total of approximately 1100 boepd.
On completion of the Transaction, Sellers will retain a 5% working interest in
the Exploitation Concessions, related joint venture and the Transport
Concession, and will be vested with an option to buy another 5% back from
Buyers.
The Transaction shall be subject inter alia to Sellers’ shareholder approval,
and it will contemplate aggregate consideration to be paid by the Buyers for the
purchase of the Target Interest and Assets, as follows:
- A cash consideration of £825,000, payable by means of an upfront payment of
£75,000 upon execution of the transaction documents (expected to occur
within a week from the Term Sheet), and the balance of £750,000 payable at
Completion (expected to occur 30 calendar days from the Term Sheet);
- A payment in kind of £400,000 via transfer to Sellers of IOX shares at a
subscription price of 1.15 NOK per share, to be made upon Completion;
- An additional contingent payment of up to £400,000 should production from
the joint venture exceed from 4,000 boepd, provided that such aggregate
contingent payment shall not exceed 10% of the net profits over the
production referenced above, after taxes and investments, obtained by the
joint venture as from the moment when any and all amounts invested by Buyers
in the Transaction have been repaid to Buyers, and aggregate losses of the
joint venture have been balanced with profits; and provided further that any
accrual of contingent consideration shall be fully terminated upon the
elapse of 5 years as from Completion;
- A further contingent payment of £100,000 should production from the joint
venture exceed from 6,000 boepd, provided that such aggregate contingent
payment shall not exceed 10% of the net profits over the production
referenced above, after taxes and investments, obtained by the joint venture
as from the moment when any and all amounts invested by Buyers in the
Transaction have been repaid to Buyers, and aggregate losses of the joint
venture have been balanced with profits; and provided further that any
accrual of contingent consideration shall be fully terminated upon the
elapse of 5 years as from Completion;
- Furthermore, the Buyers will provide a guarantee to cover Echo’s remaining
5% interest in the joint venture; and
- Also, as part of the consideration, Interoil shall grant to Sellers an
option to drill an exploratory well at Campo Nuevo (Maná) Colombia, and to
recover twice the cost through a 35% stake in the production, remaining
after such recovery with the right to 10% of production (the “Drilling
Option”), as well as a purchase option over Interoil’s Colombian assets
exercisable if Sellers had exercised the Drilling Option, and after
completion and testing the exploratory well, at consideration amounting to
the valuation made by a recognized international investment bank appointed
by the Buyers.
Additionally, at Completion Buyers will subscribe Echo shares for an aggregate
amount £ 75,000, at a value of 0.065GBP per Echo share.
Echo will also retain an option to repurchase a 5% interest in the joint venture
and related assets for a consideration of £ 100,000 over a 6 month period.
Benefits of Transaction to Interoil
The proposed Transaction allows Interoil to secure a substantial increase of its
participating interest in the above-mentioned Santa Cruz Exploitation and
Transport Concessions adding a significant number of boepd to its equity
production against a convenient consideration substantially payable in kind and
with limited dilution. The deal also results in an improvement of the joint
venture ability to carry out actions for production increase through the
incorporation of the former operator of the concessions as a new member of the
joint venture, at the same time reducing the participation of Echo to an
interest that better suits its current capabilities. The Drilling Option in turn
adds opportunities for new exploration in Colombia with no financial commitment
by the Company.
Echo Shareholders Approval
The Transaction requires approval at an Extraordinary Shareholders’ Meeting of
Echo to be held within 25 calendar days from the date of execution of the Term
Sheet.
Please direct any further questions to: ir@interoil.no
Interoil Exploration and Production ASA is a Norwegian based exploration and
production company - listed on the Oslo Stock Exchange - with focus on Latin
America. The Company is operator of several production and exploration assets in
Colombia and Argentina. Interoil currently employs approximately 50 people and
is headquartered in Oslo.
This notice contains information which is considered inside information pursuant
to the European Market Abuse Regulation. The notice has been published by Mr.
Geir Arne Drangeid (Partner and Senior Advisor, First House AS) at 19:30 CEST on
9 May 2023.
This information is subject to the disclosure requirements pursuant to section
5 -12 of the Norwegian Securities Trading Act.
Kilde
