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Equatorial Guinea and Gabon for an initial aggregate cash consideration of up to
US$ 140 million and aggregate contingent consideration of up to US$ 40 million,
based on an effective date of 1 July 2020 (collectively the “Acquisitions”).
Highlights
· Acquisitions of 14.25% working interest (“WI”) in Block G, offshore
Equatorial Guinea, and an additional 10% WI in Dussafu Marin Permit, offshore
Gabon, each from subsidiaries of Tullow Oil plc for initial combined cash
consideration of up to US$ 140 million
· Transformative and highly accretive transactions firmly establishing Panoro
as a leading Africa focussed independent listed E&P
· Purchased at US$ 5.6 per 2P barrel (based on initial consideration) and US$
2.6 per 2P+2C barrel
· Company size increased 3-4x, with the Acquisitions adding 6,900 bopd net WI
production (estimated 2021) and 25 MMbbl net WI 2P reserves[1]
· Reserve life of acquired assets ~13 years, with a payback before capex of
less than 2.5 years based on forward curve[2]
· To be financed through a combination of a contemplated US$ 70 million equity
private placement (the “Private Placement”) and an up to US$ 90 million
underwritten debt facility by a company within the Trafigura group of companies
(“Trafigura”)
· Post the Acquisitions and the related equity and debt financing, Panoro is
expected to be fully financed for all foreseeable capex and production ramp-up
to ~12,000 bopd[2] net
· Strong free cash flow, positioning the Company for dividend payments from
2023[2]
“These truly transformational Acquisitions will establish Panoro as one of the
world’s leading independent E&P companies focussed on Africa. We are purchasing
high-quality, low operating cost assets, substantial production and material
reserves in West Africa. These are highly accretive assets that deliver a major
change in our operational and financial profile, and position the Company well
to generate sustainable long-term value for our shareholders.” commented John
Hamilton, CEO Panoro Energy ASA.
“We welcome the opportunity to increase our exposure in Dussafu, offshore Gabon,
where Panoro has been an integral part of its success since 2007. In Equatorial
Guinea we are new entrants and look forward to excellent cooperation and working
with the field partners and the Ministry of Mines and Hydrocarbons to grow
further in the country. We look forward to realising the significant upside
potential that we see in these assets through an active and fully funded work
programme.”, added John Hamilton.
The Acquisitions
Panoro will acquire i) a 14.25% WI in Block G, offshore Equatorial Guinea (the
“EG Acquisition”) and ii) a 10% additional WI in Dussafu Marin Permit
(“Dussafu”) offshore Gabon (the “Dussafu Acquisition”) (collectively, the
“Assets”). Completion of the EG Acquisition and the Dussafu Acquisition,
respectively, are not inter-dependent.
The Assets comprise seven high quality, non-operated oil production fields
within Panoro’s core area with combined additional net production of 6,900 bopd
(estimated 2021) and net 2P reserves of 25 MMbbl[1]. The Assets have excellent
operators, low operating costs and significant upside potential with 2C
resources of 29 MMbbl and material exploration potential. Through the
Acquisitions, the Company will increase its net interest in its core asset
Dussafu from 7.5% to 17.5% and achieves significant diversification through the
entry into Block G, offshore Equatorial Guinea, which comprises six producing
offshore fields through the Ceiba and Okume Complex assets. The EG Acquisition
represents a new country entry for Panoro. Following the Acquisitions, Panoro
will hold assets in Gabon, Equatorial Guinea, Tunisia, Nigeria (prior to
completion of the sale of its interests in Aje to PetroNor) and South Africa[3]
and will increase its 2021e production and 2P reserves by 4x and 3x
respectively. Through the Acquisitions, Panoro will be firmly established as one
of the leading independent E&P companies focussed on Africa.
The Acquisitions are conditional on Panoro shareholders approving a contemplated
US$ 70 million equity Private Placement and will also be financed through an up
to US$ 90 million debt facility underwritten by Trafigura (jointly the
“Financing”). Following the Acquisitions and the Financing, Panoro is expected
to be fully funded through all foreseeable capex and expects to be in a position
to pay dividends after first oil from the Hibiscus/Ruche development in Gabon in
2023[2]. In addition to the US$ 90 million debt facility, Trafigura are also
providing a US$ 20 million working capital facility and a US$ 50 million
accordion option.
The Acquisitions are projected to:
· Achieve pay back before capex in less than 2.5 years
· Position Panoro to generate 2021 operating cash flow after tax of
approximately US$ 80 million (based on US$ 55 per barrel, prior to capex, base
case lifting date assumptions)
· Finance all foreseeable capex and debt repayments, allowing dividend
capacity from 2023
· Increase the Company’s net WI 2P reserves, 2C resources and 2021e production
by approximately 3x, 8x and 4x respectively
· Be purchased at US$ 5.6 per 2P barrel (based on initial consideration) and
US$ 2.6 per 2P+2C barrel
· Be materially accretive on all standard valuation metrics used in the
industry
· Not result in any material increase to Panoro’s corporate cost base, despite
transformational nature of Acquisitions
Block G, Equatorial Guinea (EG Acquisition)
Panoro and its fully owned subsidiary Panoro Energy Holding B.V. have entered
into an agreement with Tullow and Tullow Overseas Holdings B.V. to acquire 100%
of the shares of Tullow Equatorial Guinea Limited (“TEGL”) for an initial cash
consideration of US$ 89 million based on a locked box mechanism as at 1 July
2020 and subject to a customary locked box indemnity for a period of 6 months
after completion. TEGL holds a 14.25% non-operated WI in Block G that contains
the Ceiba and Okume Complex assets, offshore Equatorial Guinea (the “EG
Assets”). The EG Assets comprise six producing oil fields in water depths of 50
-850 metres, approximately 35 kilometres from shore. Based on a competent
person’s report prepared by TRACS International Limited, the EG Assets hold net
WI 2P reserves of 14.2 MMbbl and net WI 2C resources of 25.6 MMbbl as of 30 June
2020. Current net production is approximately 4,500 bopd, with a potential to
grow - close to 8,000 bopd net in 2023-25 driven by facility upgrades, well
workovers, perforation of behind pipe zones and infill drilling.
Block G is operated by Trident Energy (“Trident”) with a 40.375% WI and other
non-operated joint venture partners include Kosmos Energy (“Kosmos”) with a
40.375% WI and GEPetrol, the Equatorial Guinea national oil company, with a 5%
revenue interest. Trident and Kosmos acquired their interest from Hess in 2017
and have created a first-class operating partnership, with Trident being
responsible for production operations and optimization, and Kosmos for
exploration and subsurface evaluation. Backed by Warburg Pincus, Trident is a
highly proactive operator specializing in mid-life assets with a strong focus on
achieving growth from untapped potential and efficiencies. Trident is mostly led
by former Perenco executives, a global leading operator of mid-life E&P assets.
The Kosmos team, which originally discovered and managed the Ceiba and Okume
fields, has a strong track record as proven oil finders and brings a deep, long
term understanding of the subsurface performance and nearby exploration
potential at the EG Assets.
With first oil in 2000 (Ceiba) and 2006-11 (the Okume Complex), and combined
production to date of almost 450 MMbbl gross, the EG Assets are well-established
assets with a long production history and track record. With an estimated break
-even of <US$ 25/bbl due to low opex (estimated US$ 8-12/bbl in 2021-25) and
limited capex requirements, the EG Assets are well positioned to weather any
potential prolonged period of low and volatile oil prices.
With its substantial remaining reserves and contingent resources, the EG Assets
have a potential to produce well beyond the current license expiry (2029 for
Ceiba and 2034 for the Okume Complex) and Panoro sees the technical potential to
continue production from the EG Assets until 2050 and beyond.
Through this transformational acquisition, Panoro adds high quality, low cost
and well managed oil producing assets with substantial upside potential. In
addition, it establishes Equatorial Guinea as a new core geographical area for
Panoro.
Ceiba and Okume Complex field details
The Ceiba field was discovered in 1999 and is located in 600-800 metres of water
depth on the slope of the southern Rio Muni Basin approximately 35 kilometres
offshore. Oil production commenced in November 2000, with the field being
developed in phases with production wells tied back to the Ceiba FPSO through a
system of six subsea manifolds and flowlines. The produced liquids are processed
on the Ceiba FPSO for export. The field has 16 active production wells and 10
water injectors. Up to the end of June 2020, the field had produced a total of
204 MMbbl.
The Okume Complex consists of five separate oil fields, Okume, Ebano, Oveng,
Akom North and Elon, that were discovered in 2001-2. All fields are tied back to
a central processing facility (CPF) located at one of the Elon platforms. The
processed oil from the CPF is transported via a 25 kilometres pipeline to the
Ceiba FPSO for export. The Okume Complex fields have 32 active production wells
and 12 water injectors. Up to the end of June 2020, the Okume Complex fields
have produced a total of 237 MMbbl.
Consideration
The consideration for the EG Acquisition consists of an initial cash
consideration of US$ 89 million based on a locked box mechanism as at 1 July
2020 and subject to a customary locked box indemnity for a period of 6 months
after completion, as well as a contingent consideration of up to US$ 16 million
(the “EG Contingent Consideration”). In addition, Tullow will also be entitled
to a US$ 5 million deferred consideration, payable on the later of (a)
completion of the EG Acquisition, or (b) within 2 business days of completion of
the Dussafu Acquisition (as described below).
The EG Contingent Consideration is up to US$ 16 million in aggregate payable
only in years where the average annual net production of the acquired interests
is in excess of 5,500 bopd. Once this initial net production threshold has been
reached, in that year, and for the four consecutive subsequent annual periods,
annual contingent consideration of US$ 5.5 million will be payable to Tullow
provided that the production threshold is met in such annual period and the
average daily Dated Brent oil prices in respect of the annual period is in
excess of US$ 60/bbl, subject to the aforementioned cap of US$ 16 million.
The completion of the EG acquisition is expected during H1 2021.
Dussafu Acquisition
Panoro and its fully owned subsidiary Pan Petroleum Gabon BV, have entered into
an agreement with Tullow and Tullow Oil Gabon SA to acquire a 10% WI in the
Dussafu Marin Permit, offshore Gabon for an initial cash consideration of US$ 46
million based on an effective date of 1 July 2020 which is subject to customary
working capital and other customary adjustments to be made at completion. Panoro
currently holds 7.5% WI in Dussafu and upon completion of the Dussafu
Acquisition, the Company will increase its WI to 17.5%. The Dussafu Acquisition
will significantly increase Panoro’s exposure to the near-term production and
considerable upside potential from this high-quality asset. Following completion
of the Dussafu Acquisition, Panoro’s net WI 2P reserves at Dussafu will be
approximately 19 MMbbl, and net WI production from the field is expected to
increase from 1,200 bopd to approximately 2,800 bopd (2021 operator estimate).
Having been a partner in Dussafu since 2007, Panoro has a deep knowledge of the
block and its potential. Located in a prolific fairway offshore Gabon, Dussafu
has an outstanding track record with 15 consecutive successful well penetrations
and an increase in resource base from 7 MMbbl in 2010 to +150 MMbbl in 2019,
excluding the +100 MMbbl additional resource potential identified on the
Hibiscus field during 2020.
Dussafu is currently producing approximately 15,000 bopd gross from four wells
at the Tortue field, which is expected to increase to ~20,000 bopd during 2021
with the addition of two additional Tortue wells. Through the Hibiscus/Ruche
development, consisting of the Hibiscus and Ruche fields, production is expected
to grow to ~40,000 bopd in 2023 with further growth potential from
Hibiscus/Ruche phase 2.
A minimum of one exploration well is planned to be drilled in Q2 2021 into the
greater Hibiscus structure, with another optional well being considered for Q3.
As with the EG Assets, Dussafu benefits from a break-even oil price of <US$
25/bbl with a substantial production growth ahead.
Consideration
The consideration for the Dussafu Acquisition consists of an initial cash
consideration of US$ 46 million (to be adjusted at completion for working
capital and other customary adjustments) and a contingent consideration of up to
US$ 24 million (the “Dussafu Contingent Consideration”).
The effective date of the Dussafu Acquisition is 1 July 2020 and completion is
expected during H1 2021.
The Dussafu Contingent Consideration of up to US$ 24 million may be payable once
commercial production commences on Hibiscus and Ruche and achieves daily
production equal to or greater than 33,000 bopd gross over any 60-day continuous
period. Once this milestone has been met, annual contingent consideration will
apply to that year and to each of the subsequent four years where the average
daily Dated Brent oil price is in excess of US$ 55 per barrel, subject to the
US$ 24 million cap. Where the oil price threshold has been met, the Dussafu
Contingent Consideration payable for that year will be based on 15% of net free
cashflow after all taxes, operating and capital costs from the acquired 10% WI.
The contingent payment will be capped for any year at US$ 5 million.
Julien Balkany, Chairman of Panoro added: “These two very attractive and highly
value accretive acquisitions perfectly complement our existing upstream E&P
portfolio in West Africa and represent a major step in the execution of Panoro’s
ambitious growth strategy to continue building a balanced full-cycle E&P company
focused on Africa. We are proud and excited to strengthen our position in Gabon
and to enter Equatorial Guinea and intend to deliver strong returns for all the
stakeholders involved.”
Funding of the Acquisitions
Trafigura, one of the world’s leading independent commodity trading and
logistics houses is providing a fully underwritten acquisition finance loan
facility of up to US$ 90 million to Panoro to partially finance the
Acquisitions. The loan will be made available in two tranches, Tranche A of up
to US$ 55 million in respect of the EG Acquisition and Tranche B of up to US$ 27
million in respect of the Dussafu Acquisition; provided that Tranche B shall
automatically increase to up to US$ 35 million upon the completion of the EG
Transaction. Tranche A and Tranche B can be drawn separately and are not
conditional on each other. Each loan will amortise over a period of 5 years, and
carries an annual interest rate of 3M LIBOR plus 7.5%. Amongst other fees under
the terms agreed, the loan facility is being made available against the issuance
of US$ 562,500 worth of Panoro shares issued in conjunction with, and in
addition to the shares issued in, the Private Placement. As part of this
transaction, Trafigura will also provide (i) in addition to the acquisition
financing facilities, a working capital facility of up to US$ 20 million to
address the irregular nature of crude liftings; and (ii) crude oil marketing.
Panoro and Trafigura have signed a binding commitment letter for this debt
financing subject to long form financing documentation and certain customary
conditions precedent being fulfilled. An accordion option for an additional US$
50 million is included alongside (and in addition to) the acquisition finance
facilities. There is no long-term oil price hedging obligation, although Panoro
will seek to hedge a portion of near term production to manage price risk for
its lifting schedule.
In addition, as separately announced today, Panoro is launching the Private
Placement where the net proceeds will be used to partially finance the
Acquisitions, and related fees and expenses as well as for general corporate
purposes. The Company’s two largest shareholders, Sundt AS and Kistefos AS, have
committed to subscribe, and will be allocated offer shares, for an amount of
NOK 100 million and NOK 85 million (USD 10 million) respectively, which
corresponds to more than their pro-rata share of the Private Placement. In the
event that one or both Acquisitions do not close, the net proceeds will (in
whole or in part) be used for general corporate purposes.
The Private Placement will trigger a requirement to publish a prospectus, which
will include pro forma financial information with respect to the Acquisitions.
As Panoro is also proposing to include a subsequent offering, the prospectus
will be a joint listing and offering prospectus expected to be published shortly
after the extraordinary general meeting of Panoro, scheduled to be held on or
around 3 March 2021.
Conditions precedent to the Acquisitions
The Dussafu Acquisition is subject to customary governmental notifications and
non-objection to the transaction, and joint venture consents. Each Acquisition
is subject to Panoro’s shareholders approving the Private Placement and
completing the Trafigura acquisition finance loan facility. In addition, the EG
Acquisition is subject to Tullow’s general meeting of shareholders approving the
disposal of their EG subsidiary. There are no pre-emptive rights for the
Acquisitions.
Under each Acquisition agreement, Panoro or the relevant Tullow seller, are
required to pay to the other a break fee of US$ 2 million if it fails to carry
out its obligations with respect to the satisfaction of the conditions precedent
or fails to undertake its completion obligations.
Expected timetable of key events
EVENT EXPECTED TIMING
Commencement and close of Book Commencement of book-building: 9
-build period Private February 2021Expected close: 10 February
Placement 2021
Panoro EGM On or around 3 March 2021
Publication of prospectus Expected shortly after the date of the
EGM
Execution of Financing Expected on or about the date of the EGM
Date of Tullow general meeting Fifteen clear days after issuance of
of shareholders Tullow’s Class 1 circular and meeting
notice
Completion under the Expected during H1 2021
Acquisition Agreements
No agreements for the benefit of members of the board or management of Panoro
have been or will be entered into in connection with the Acquisitions.
Mildwaters Consulting LLP and Advokatfirmaet Schjødt have acted as legal counsel
to Panoro in connection with the Acquisitions.
A corporate presentation will be available shortly on Panoro’s website
www.panoroenergy.com and the Company will hold a webinar presentation for
Investors at 8.30am CET on 10 February 2021.
The webinar presentation can be accessed through registering at the link below
and the online event will be equipped with features to ask live questions.
Joining instructions for participating online or through using local dial-in
numbers will be available upon completion of registration.
Date and 10 February 2021, 08:30 .a.m. CET
Time:
Registration: https://register.gotowebinar.com/register/5255107441268667664
After registering, participants will receive a confirmation
email containing information about joining the webinar.
Participants can use their telephone or computer microphone and
speakers (VoIP).
Notes
-
Estimates per the Competent Person’s Reports (CPR) from TRACS International
Limited (TRACS) and Netherland, Sewell & Associates Inc (NSAI).
- Management estimates based on prevailing oil prices.
- The Aje asset in Nigeria is in the process of being divested to PetroNor
E&P; South Africa is subject to completion of transaction.
Enquiries:
John Hamilton, Chief Executive Officer
Qazi Qadeer, Chief Financial Officer
Tel: +44 203 405 1060
Email: investors@panoroenergy.com
About Panoro Energy
Panoro Energy ASA is an independent exploration and production company based in
London and listed on the main board of the Oslo Stock Exchange with the ticker
PEN. Panoro holds production, exploration and development assets in Africa,
namely the Dussafu License offshore southern Gabon, OML 113 offshore western
Nigeria (held-for-sale, subject to completion), and the TPS operated assets,
Sfax Offshore Exploration Permit and Ras El Besh Concession, offshore Tunisia.
Subject to completion of certain conditions, Panoro has also farmed-into an
exploration Block 2B, offshore South Africa.
For more information visit the Company’s website at www.panoroenergy.com.
IMPORTANT NOTICE
This announcement is not and does not form a part of any offer to sell, or a
solicitation of an offer to purchase, any securities of Panoro Energy ASA. The
distribution of this announcement and other information may be restricted by law
in certain jurisdictions. Copies of this announcement are not being made and may
not be distributed or sent into any jurisdiction in which such distribution
would be unlawful or would require registration or other measures. Persons
into whose possession this announcement or such other information should come
are required to inform themselves about and to observe any such restrictions.
The securities referred to in this announcement have not been and will not be
registered under the U.S. Securities Act of 1933, as amended (the “Securities
Act”), and accordingly may not be offered or sold in the United States absent
registration or an applicable exemption from the registration requirements of
the Securities Act and in accordance with applicable U.S. state securities laws.
The Company does not intend to register any part of the offering or their
securities in the United States or to conduct a public offering of securities in
the United States. Any sale in the United States of the securities mentioned in
this announcement will be made solely to “qualified institutional buyers” as
defined in Rule 144A under the Securities Act.
In any EEA Member State, this communication is only addressed to and is only
directed at qualified investors in that Member State within the meaning of the
Prospectus Regulation, i.e., only to investors who can receive the offer without
an approved prospectus in such EEA Member State. The expression “Prospectus
Regulation” means Regulation 2017/1129 as amended together with any applicable
implementing measures in any Member State.
This communication is only being distributed to and is only directed at persons
in the United Kingdom that are (i) investment professionals falling within
Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005, as amended (the “Order”) or (ii) high net worth entities,
and other persons to whom this announcement may lawfully be communicated,
falling within Article 49(2)(a) to (d) of the Order (all such persons together
being referred to as “relevant persons”). This communication must not be acted
on or relied on by persons who are not relevant persons. Any investment or
investment activity to which this communication relates is available only for
relevant persons and will be engaged in only with relevant persons. Persons
distributing this communication must satisfy themselves that it is lawful to do
so.
Matters discussed in this announcement may constitute forward-looking
statements. Forward-looking statements are statements that are not historical
facts and may be identified by words such as “believe”, “expect”, “anticipate”,
“strategy”, “intends”, “estimate”, “will”, “may”, “continue”, “should” and
similar expressions. The forward-looking statements in this release are based
upon various assumptions, many of which are based, in turn, upon further
assumptions. Although the Company believes that these assumptions were
reasonable when made, these assumptions are inherently subject to significant
known and unknown risks, uncertainties, contingencies and other important
factors which are difficult or impossible to predict and are beyond its control.
Actual events may differ significantly from any anticipated development due to a
number of factors, including without limitation, changes in investment levels
and need for the Company’s services, changes in the general economic, political
and market conditions in the markets in which the Company operate, the Company’s
ability to attract, retain and motivate qualified personnel, changes in the
Company’s ability to engage in commercially acceptable acquisitions and
strategic investments, and changes in laws and regulation and the potential
impact of legal proceedings and actions. Such risks, uncertainties,
contingencies and other important factors could cause actual events to differ
materially from the expectations expressed or implied in this release by such
forward-looking statements. The Company does not provide any guarantees that the
assumptions underlying the forward-looking statements in this announcement are
free from errors nor does it accept any responsibility for the future accuracy
of the opinions expressed in this announcement or any obligation to update or
revise the statements in this announcement to reflect subsequent events. You
should not place undue reliance on the forward-looking statements in this
document.
The information, opinions and forward-looking statements contained in this
announcement speak only as at its date, and are subject to change without
notice. The Company does not undertake any obligation to review, update,
confirm, or to release publicly any revisions to any forward-looking statements
to reflect events that occur or circumstances that arise in relation to the
content of this announcement.
Neither the Company nor any of their respective affiliates makes any
representation as to the accuracy or completeness of this announcement and none
of them accepts any responsibility for the contents of this announcement or any
matters referred to herein.
This announcement is for information purposes only and is not to be relied upon
in substitution for the exercise of independent judgment. It is not intended as
investment advice and under no circumstances is it to be used or considered as
an offer to sell, or a solicitation of an offer to buy any securities or a
recommendation to buy or sell any securities in the Company. Neither the Company
nor any of their respective affiliates accepts any liability arising from the
use of this announcement.
This information is subject to the disclosure requirements pursuant to Section 5
-12 the Norwegian Securities Trading Act.
Kilde
