Continental Focus, International Reach

PetroNor E&P to Acquire Panoro’s Interest in OML 113

Tuesday, October 22, 2019

October 2019: PetroNor E&P announced that it has entered into a sale and purchase agreement (SPA) with Panoro Energy ASA (Panoro), for its interest in Offshore Mining Lease 113 (OML 113) offshore Nigeria. OML 113 contains the Aje oil and gas field.

The proposed transaction will see PetroNor acquire 100% of the shares of Panoro’s fully owned subsidiaries Pan-Petroleum Services Holding BV (“PPSH”) and Pan-Petroleum Nigeria Holding (PPNH) which currently hold 100% of the shares in Pan-Petroleum Aje Limited (Pan Aje), which participates in the exploration for and production of hydrocarbons in Nigeria and holds a 6.502% participating interest, with 16.255% cost bearing interest, representing an economic interest of 12.1913% in OML 113.

The upfront consideration for the Transaction is US$ 10 million to be paid in PetroNor shares, with an option to pay partly in cash should the share price of PetroNor fall below USD 0.13 per share. The transaction also includes a contingent consideration structured as a royalty payment on future gas sales associated with the further development in OML 113.

Concurrently, PetroNor is in parallel concluding a separate agreement with the OML 113 operator Yinka Folawiyo Petroleum (YFP) to create a new holding company (SPV) that will see PetroNor assume the lead technical and management role to develop the next phases of the project. Together these agreements provide the framework and pathway towards sanction of the next phases of the Aje project in order to exploit the substantial gas and liquids reserves and unlock its significant value.

PetroNor and YFP will hold respectively 45% and 55% of the SPV. The SPV, which will include the current license ownerships of YFP (the operator), YPF-DW and Panoro, will hold an approximate 75.5 % participating interest, approximately 29% economic interest for the initial period and approximately 38.7% economical interest for the main part of the project going forward. The closing of the two transactions are interlinked and each is contingent on the closing of the other.

Jens Pace, Chief Executive Officer of PetroNor said: “This acquisition is wholly in line with our stated growth strategy in terms of acquiring assets that add production and material reserves and resources to the company. The upside potential attached to this project is significant and we are confident that the restructuring of the Aje partners, through the partnership with YFP, will result in a dynamic and effective operating JV capable of realising the full value of the field, both in terms of near-term oil production growth and more importantly with regards to the development of the substantial gas resources associated with the field.

“The Transaction ensures alignment between PetroNor, Panoro and YFP meaning all parties benefit in the success case. We continue to assess a pipeline of opportunities that will enable us to achieve our ambitious growth target of 30,000 boepd within three years through organic and acquisitive means, as we seek to establish ourselves as a premier, full-cycle, pan-African operator.”

The Transaction is conditional on execution and conclusion of the agreement with YFP, expected to conclude in the coming weeks, and upon the authorization of the Nigerian Department of Petroleum Resources and the consent of the Nigerian Minister of Petroleum Resources. Securing the authorization and consent is expected to take several months with a long stop date agreed by the parties of 31 December 2020, following which either party is entitled to terminate the agreement.