Petroleum Africa
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Tuesday, December 16, 2014
Sonde Resources Corp. executed an Exclusivity and Sale and Purchase Agreement with an arm’s length party. The Exclusivity Agreement provides for a 90-day period of exclusivity during which the parties have agreed to negotiate in good faith the terms of definitive documentation (Sale and Purchase Agreement and ancillary agreements) to complete the sale of the shares of Sonde North Africa, the company’s wholly owned subsidiary that is the party to the EPSA for the Joint Oil Block in North Africa.
The consideration for the acquisition is $8 million, less any sums paid by the purchaser on Sonde’s behalf. The company will receive $2 million of the purchase price in two installments: $1 million upon the satisfaction of certain conditions relating to transfer of certain assets held by Sonde BV to the purchaser and $1 million on January 31, 2015. The prepayment, if paid, is non-refundable and will be applied to the negotiated purchase price of $8 million. Sonde intends to use the prepayment to fund its expenses in connection with the negotiation of the definitive documentation relating to the acquisition and for working capital.
The company pointed out that there can be no assurance that Joint Oil will agree to any changes to the exploratory work program under the EPSA or that the other conditions precedent will be satisfied. Additionally, no party is under any obligation or commitment to enter into any binding agreement with regard to the acquisition merely by reason of the execution of the Exclusivity Agreement.
Sonde also announced that the penalty of $15 million was paid to Joint Oil for failure to drill an exploratory well (Fisal-1) by November 30, as required by the EPSA. Under the terms of the EPSA, the next well is required to be drilled by December 23 2014 and the final well is required to be drilled by December 23, 2015.
Sonde has provided a corporate guarantee of $30 million to secure its commitment to drill these two additional wells. As previously disclosed, it no longer generates cash flow from petroleum and natural gas sales and the company no longer has a credit facility. As such, the company must fund its operations, including its commitments under the EPSA, from working capital, or property dispositions. As a result of this liquidity position, no steps have been taken to meet the drilling obligation in respect of the next well. Failure to meet these commitments could result in a termination of the EPSA by Joint Oil.
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