Petroleum Africa
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Friday, March 30, 2012
Kulczyk Oil Ventures Inc. (KOV) has decided to let its option to acquire a participating interest in Nigeria’s OML 42 expire. KOV and its major shareholder Kulczyk Investments S.A. (KI) mutually agreed that it was not in the best interest of either company to continue the option beyond its expiry date of March 31.
KOV had announced in May 2011 that it had joined the Neconde Energy Ltd. consortium and that Neconde had entered into an agreement with Shell’s Nigerian unit SPDC and certain of its partners in OML 42 pursuant to which Neconde would acquire a 45% participating interest in the license.
In December the company announced that the purchase of OML 42 by Neconde was completed for a purchase price, subject to closing adjustments, of $585 million. Of this amount, $435 million was paid by consortium partners as equity contributions to Neconde with KI paying for the potential share of KOV pursuant to the bridge financing arrangement. The remaining $150 million of the total purchase price was funded through Neconde debt financing.
Under the terms of the bridge financing arrangement with KI, KOV had until March 31 to repay KI for its bridge financing, after which date the shares of KOV in Neconde would be transferred to KI.
Tim Elliott, president and CEO of KOV commented: “OML 42 is a world-class oil property with substantial opportunity for growth in production and reserves.
KOV is committed to the growth of the business but following considered due diligence and with our shareholders value at the front of our minds the executive team have decided that to exercise our option would be too dilutive to existing shareholders at current market price. I would like to take this opportunity to thank our major shareholder KI for their support throughout this project.”
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