Petromanas Energy (PMI-V) Feb 1st 2016 today announced that it has entered into a Sale and Purchase Agreement with Shell Upstream Albania B.V., a wholly-owned subsidiary of Royal Dutch Shell plc, pursuant to which Shell has agreed to acquire all of Petromanas' Albanian assets for aggregate gross proceeds of US$45 million (subject to closing adjustments) (the "Proposed Transaction"). The Proposed Transaction is expected to close on or about March 15, 2016 and is subject to customary closing conditions including applicable regulatory approvals, as well as Petromanas shareholder approval.
The Proposed Transaction
Petromanas Albania GmbH ("PAG"), a wholly-owned subsidiary of the Company, and Shell are parties to a production sharing contract in onshore Albania (the "Block 2-3 PSC") and are parties to a joint operating agreement for the Block 2-3 PSC dated February 9, 2012 (the "JOA"). On August 5, 2015, PAG and Shell were awarded the right to negotiate a production sharing contract for Block 4 onshore in Albania (the "Block 4 Right"). The Company and Shell currently hold, respectively, a 25% and 75% participating interest in the Block 2-3 PSC, the JOA and the Block 4 Right. Under the terms of the Agreement, the Company will dispose of its 25% participating interest in the Block 2-3 PSC (including Operatorship), the JOA and the Block 4 Right to Shell. US$5 million of the gross proceeds from the Proposed Transaction (the "Escrow Funds") will be held in escrow and not released to Petromanas until the expiration of the indemnity period under the Agreement, being six months following the closing date of the Proposed Transaction.
The Company believes that the Proposed Transaction will provide significant benefits as it is intended to allow the Company to return capital to shareholders, wind down the Company's Albanian operations in an orderly manner and provide sufficient capital for the Company to reorganize itself, including making strategic decisions on its assets in France. The board of directors (the "Board") and management of the Company believe that the Proposed Transaction is in the best interests of the Company.
Return of Capital
Following closing of the Proposed Transaction, determination of post-closing adjustments and subject to shareholder and regulatory approval, Petromanas intends to make a special distribution to shareholders (the "Distribution"). The Distribution is intended to be a return of capital and will be funded primarily from the net proceeds of the Proposed Transaction but will also include approximately US$3 million of working capital. Petromanas anticipates that an aggregate of approximately US$43 million will be available for distribution to shareholders following closing of the Proposed Transaction, which, subject to currency exchange fluctuations, would result in a distribution to Petromanas shareholders of approximately CAD$0.08 to CAD$0.09 per share. The Company anticipates fixing a record date in respect of the Distribution once final closing adjustments have been determined.
Shareholder Meeting
A special meeting (the "Meeting") of the shareholders of common shares of the Company is expected to be held in Calgary on or about March 14, 2016. The Proposed Transaction and the Distribution will require the approval of the shareholders of Petromanas by way of special resolution of two-thirds of the shareholders present in person or represented by proxy at the Meeting.
The Board has carefully reviewed and considered the terms and conditions of the Agreement and, after consultation with its financial and legal advisors, has unanimously determined that the Proposed Transaction and the Distribution are in the best interests of the Company. Accordingly, the Board unanimously recommends that shareholders vote in favour of the resolutions to approve the Proposed Transaction and the Distribution.
Strategic Process
The Proposed Transaction is expected to conclude the Company's previously announced strategic process. In October 2014, and based on the costs associated with drilling the Shpirag-2 and Molisht-1 wells, management entered into a strategic process to identify and review all options to support the financial requirements of a longer-term appraisal and development of Blocks 2-3. The Company retained Peters & Co. Limited ("Peters & Co.") to act as its financial advisor in connection with such review process. The Board has received an opinion from Peters & Co. that the consideration to be received by the Company under the Agreement is fair from a financial perspective to Petromanas. Norton Rose Fulbright Canada LLP and Fasken Martineau DuMoulin LLP acted as legal counsel to Petromanas.
Update on Assets in France and Australia
Petromanas has also previously announced marketing initiatives to identify opportunities to further develop its assets in both France and Australia. The Company believes in the value of its French assets and intends to continue supporting the marketing initiative going forward. The Company intends to allocate sufficient capital from the net proceeds of the Proposed Transaction, including retention of the Escrow Funds, to support its activities in France and for general corporate purposes. Based on current market conditions, reduced interest from potential partners, and the higher risk profile of its Australian assets, Petromanas has elected to terminate the process for its Australian assets and has submitted a letter to the Western Australian Department of Mines and Petroleum to relinquish its exploration licenses (EP 464 and EP 486) in the Canning Basin.
About Petromanas Energy Inc.
Petromanas Energy Inc. is an international oil and gas company focused on the exploration and development of its assets in Albania. Petromanas, through its wholly-owned subsidiary, holds a Production Sharing Contract ("PSC") with the Albanian government. Under the terms of the PSC, Petromanas has a 25% working interest in Blocks 2-3 that comprises approximately 638,0000 gross acres across Albania's Berati thrust belt. Petromanas also holds exploration assets in France and Australia.
SOURCE Petromanas Energy Inc.
Glenn McNamara, CEO,
Bill Cummins, CFO,
Petromanas Energy Inc.,
Suite 1720,
734 - 7th Avenue SW,
Calgary, Alberta,
Canada
T2P 3P8,
Tel: +1 403 457 4400,
Fax: +1 403 457 4480,
Email: info@petromanas.com ,
Website: www.petromanas.com ;
Nick Hurst,
NATIONAL Equicom,
800 - 6th Avenue SW,
Suite 1600,
Calgary, Alberta,
Canada
T2P 3G3,
Tel: +1 403 218 2835,
Fax: +1 403 218 2830,
Email: nhurst@national.ca |
