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Coro Energy renegotiates Bulu acquisition deal

By Josh White

Date: Thursday 18 Jul 2019

Coro Energy renegotiates Bulu acquisition deal

(Sharecast News) - South east Asia-focussed upstream oil and gas company Coro Energy has renegotiated the terms of the proposed acquisition of a 42.5% interest in the Bulu production sharing contract, offshore East Java, which contains the Lengo gas field, it announced on Thursday.
The AIM-traded firm said the original terms of the acquisition, as announced on 3 September, included a cash consideration of $6.96m and back costs and other working capital adjustments estimated to be around $1.04m.

Those were both to be paid by Coro in cash to AWE on closing of the acquisition, with up to $4m in new Coro ordinary shares to go to HyOil Bulu.

Under the revised acquisition terms, the cash consideration and the reimbursement amount payable by the company to AWE had been restructured such that it would now be payable in four tranches.

The first would see $2.5m paid on completion, which would include both $1.46m of the cash consideration as well as the reimbursement amount.

Coro said the second tranche would see $1.5m be paid on 1 September 2020, followed by a third tranche of $2.5m on the sooner of either the Bulu partners agreeing final investment decision to proceed with the financing, development and construction of the project pursuant to the approved plan of development, or 1 July 2021.

The final tranche would see $1.5m paid on the sooner of the date of commencement of commercial production from Bulu, or 31 December 2022.

All other terms of the acquisition remained as originally announced, including the payment of the equity consideration payable to HyOil in three tranches.

Completion of the transaction remained conditional on joint venture partner pre-emption and regulatory government approvals, prior to a long stop date of 2 December.

"This re-negotiation with the asset vendor extends the consideration payment schedule out to first commercial gas production and allows more time for regulatory approvals to be obtained," said chief executive officer James Menzies.

"This both helps de-risk the investment on Coro's behalf, whilst also preserving cash in order to build the company's portfolio further.

"We look forward to both completing the acquisition in due course and concluding an agreement for the sale of Lengo gas, as the next significant milestone in taking this project forward."

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