Petroleum Africa
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Tuesday, March 25, 2014
Ophir Energy has completed its sale of a 20% interest in Tanzania’s Blocks 1, 3, and 4 to Pavilion Energy. The company has received cash of $1.255 billion reflecting the purchase price consideration of $1.250 billion plus a completion adjustment of $5 million to reflect interest and working capital movements since the effective date of the transaction of January 1. A further $38 million is payable following the FID in respect of the development of Blocks 1, 3 and 4, currently expected in 2016.
A tax liability will be incurred on the transaction in Tanzania. The timing of the payment will be finalized after discussion with the relevant tax authorities. Net proceeds after tax from the transaction are expected to be around $1billion based on management estimates. This estimate will be subject to finalization of the 2013 and 2014 corporate tax returns which impact the basis of the calculation with respect to allowable losses arising from brought forward and current year expenditure.
Ophir will use the proceeds from this transaction will support its forward plans which include the investing in a number of new opportunities that are under consideration and have transformational growth potential. This is in addition to having the flexibility to rapidly capitalize on any exploration success from the forward drilling program which is well funded from its existing cash resources.
Management remain committed to maximizing and delivering returns to shareholders and the Board continues to monitor closely the capital needs of the business and the appropriate level of cash liquidity.
Nick Cooper, CEO, commented: “We are delighted to welcome Pavilion Energy into the Tanzanian LNG development across Blocks 1, 3 and 4. The partial monetization of our interests is in keeping with Ophir’s strategy of minimizing exposure to development capex and realizing the value created from exploration success at the appropriate time.”
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