PA Resources announces successful farm-out in Tunisia and initiates review of strategy and assets
PA Resources is committed to create value by developing prioritized assets into production and today announces a first important step by farming out 70 percent of its offshore assets and related undertakings in Tunisia to the reputable operator EnQuest. The new board of directors has initiated a review of the Company’s strategy, assets and financing.
Farm-out of 70 percent of interest in and operatorship of offshore oil producing Didon and the development stage Zarat in Tunisia
- Upfront cash consideration of USD 23 million
- Additional cash payment of USD 93 million contingent on development of the Zarat field
- Contingent payments of up to USD 133 million following successful project developments relating to achieving certain targets
- PA Resources retains significant upside potential in the offshore assets through its remaining 30 percent interest and maintains its present interest in Tunisian onshore assets and producing DST fields
- Farm-out leads to book loss of SEK 110 million
Strategic review initiated
- The new board of directors together with management has initiated a review of PA Resources’ strategy, assets and long term financing
PA Resources’ CEO Philippe R Probst comments: “With a 100 percent interest in Zarat and Didon, PA Resources was never in a position, nor intended to pursue this development without a partner. Partnering with EnQuest is an important step in realizing the value of the company’s assets. The board is now reviewing the company’s strategy and assets and is exploring different possibilities to secure financing of upcoming loan maturities and other commitments.”
Webcast telephone conference today 29 May 2013, at 10.00 a.m. CET
Agreement with EnQuest regarding farm-out of the Didon concession and Zarat permit
PA Resources has reached an agreement with EnQuest PLC to farm out 70 percent of the company’s offshore assets in the Republic of Tunisia. The farm-out includes the ownership interest together with the operatorship in the Didon concession and the Zarat permit, including the Zarat and Elyssa fields and additional exploration assets.
PA Resources retains significant upside potential in offshore Tunisia through its remaining 30 percent interest. Participating interests in the Zarat permit are subject to Government back-in rights.
By bringing in EnQuest – a dynamic operator with strong capabilities and excellent track record – PA Resources secures the opportunity to realise the value of its resources held in the Zarat permit through development.
The transaction reduces PA Resources’ risk exposure to commitments and work programmes from an estimated USD 150 million down to USD 45 million, and the company’s share of a Zarat field development will to a large extent be funded through the agreement with EnQuest.
As part of the agreement, PA Resources will receive an upfront cash consideration of USD 23 million, payable upon completion of the Didon transaction. The company stands to receive additional contingent considerations of USD 93 million relating to a Zarat development. Additional consideration of up to USD 133 million is payable in relation to the potential developments in the Zarat and Elyssa fields if development cost of 2P reserves is USD 18 per boe or less, with the top end of the range of such additional consideration achievable if such development costs are USD 13 per boe or less and upon achievement of certain revenue targets. The maximum amount of consideration above the initial USD 23 million completion payment will not exceed USD 227 million.
The farm-out is structured as two separate transactions; one relating to the Didon concession expected to be completed during the second half of 2013 and one relating to the Zarat permit expected to be completed during the fourth quarter 2013. The effective date of the transaction is 1 January 2013.
The farm-out will reduce PA Resources’ total 2P reserves from 56 to 24 mmboe and Contingent Resources from 142 to 78mmboe. The transaction reduces PA Resources’ production from the Didon field by approximately 1,000boepd (net), from 1,400 boepd to 400 boepd, while offering near term growth potential through infill drilling and step out opportunities. The transaction will lead to a book loss of approximately SEK 110 million, which will be accounted for in the second quarter 2013.
Completion of the transaction is subject to a number of conditions precedent, including, in relation to the acquisition of an interest in the Zarat Permit, all necessary approvals by relevant authorities and government.
PA Resources retains its present interest in the onshore producing DST fields in Tunisia (Douleb, Semmama and Tamesmida) as well as its exploration acreage in the Jelma, Makthar and Jenein Centre licences.
Review of strategy, assets and long term financing initiated
A new board of directors in PA Resources was elected by the annual general meeting held on 14 May 2013. The board includes members with extensive experience of the international oil industry as well as the international financial markets.
The board resolved to appoint the board member Philippe R Probst as CEO effective as of 15 May 2013. A process to recruit a CEO on a permanent basis is in progress. Tomas Hedström joined the company as CFO on 2 May 2013.
The board is presently reviewing the assets and the strategy of the company. In view of the company’s SEK bond loan maturing in October 2013, the board is also reviewing various alternatives to secure a long term financing on acceptable terms.
Webcast telephone conference today, 29 May 2013, at 10.00 a.m. CET
A webcast telephone conference will be held today at 10.00 a.m. CET where the President and CEO Philippe R Probst and CFO Tomas Hedström will present the background to and facts about the farm-out transaction. The presentation will be webcasted live on www.paresources.se and an on-demand version will be available after the presentation.
Shortcut to the webcast:
http://storm.zoomvisionmamato.com/player/paresources/objects/a8t5b9pd/
For participation by telephone, please call:
SE: + 46 8 505 564 74
UK: +44 203 364 5374
US: +1 855 753 2230
Stockholm, 29 May 2013
PA Resources AB (publ)
For queries, please contact:
Philippe R Probst, CEO
+ 46 8545 211 50
Carolina Strömlid, Head of Corporate Communications & IR,
+46 708807173
PA Resources AB (publ) is an international oil and gas group which conducts exploration, development and production of oil and gas assets. The Group operates in Tunisia, Republic of Congo (Brazzaville), Equatorial Guinea, United Kingdom, Denmark, Greenland, the Netherlands and Germany. PA Resources has oil production in West and North Africa. The parent company is located in Stockholm, Sweden. In 2012, PA Resources reported sales of SEK 2.2 billion. The share is listed on NASDAQ OMX in Stockholm, Sweden. For further information please visit www.paresources.se.
The above information has been made public in accordance with the Securities Market Act and/or the Financial Instruments Trading Act. The information was published at 08.00 a.m. CET on 29 May 2013.
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