Petroleum Africa
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Wednesday, March 20, 2019
African Petroleum Corp. entered into an agreement to combine with PetroNor E&P Ltd for an all-share consideration of around 816 million shares in African Petroleum. PetroNor is a privately owned, Africa focused E&P independent, that holds a 10.5% indirect interest in the Republic of Congo’s PNGF Sud fields (PNGF Sud) and the right to negotiate entry into a 14.7% indirect interest in an exploration license covering the PNGF Bis fields.
Subject to shareholder approval, and certain other customary conditions, African Petroleum will at completion of the Transaction change its name to PetroNor E&P Limited.
The transaction is recommended unanimously by African Petroleum’s Board of Directors and executive management holding shares in the company have provided their pre-commitment to vote in favor of the transaction at a general meeting expected to be held in April.
The combining of the two companies gives African Petroleum diversified, low risk, long life and high-quality producing assets, with current net (working interest) production of around 2,300 bpd and medium-term exploration upside in a well-established operating jurisdiction.
The PetroNor team has extensive experience doing business in Africa, which, together with African Petroleum’s public platform, will be used to grow the company into a leading Africa-focused E&P independent.
PetroNor’s subsidiary, Hemla E&P Congo, was awarded a 20% participating interest in the PNGF Sud in the bid round organized by the ROC’s Ministry of Hydrocarbons in September 2016. The license is operated by Perenco and is currently producing in excess of 20,000 bpd of crude. The license contains the Tchendo, Tchibouella, Tchibouela Est, Tchibeli and Litanzi producing fields.
Jens Pace, CEO of African Petroleum and proposed CEO of the combined company, commented: “This is a truly transformative transaction that diversifies our portfolio considerably whilst simultaneously strengthening our position with regards to ongoing arbitration and farm-down processes. We have been proactively seeking opportunities to diversify our footprint away from pure-exploration, and this proposed combination with PetroNor delivers all the criteria we sought. The combined company will benefit from a proven reserve base generating strong and predictable cash flow and material upside potential from the Congo assets, as well as considerable exploration upside from our existing portfolio. We believe that this proposed transaction is undoubtedly in the best interest of our shareholders as it will help protect value from our existing portfolio and provide a much stronger platform from which we can deliver long-term value.”
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