Oslo, 06 November 2018 - Panoro Energy (the "Company" or "Panoro", with OSE
ticker: "PEN") announces that its Norwegian subsidiary Panoro Tunisia Production
AS (the "Buyer") has reached an agreement (the "Agreement") with OMV Exploration
& Production GmbH ("OMV" or the "Seller") to acquire 100% of the shares of OMV
Tunisia Upstream GmbH (the "Target") for a cash consideration of $65 million
(the "Acquisition") based on an effective date of 1 January 2018. The Target
holds a 49% interest in five oil producing concessions in Tunisia with net 2P
reserves of 8.1 million barrels, and net production of approximately 2,000 bopd
from 14 wells. The Target also owns 50% of Thyna Petroleum Services S.A.
("TPS"), which serves as the operating company for the five oil producing
concessions. The Agreement entails signing of an agreed form share sale and
purchase agreement, in accordance with Austrian notarial processes, following
announcement of completion of the Private Placement described below.
The five oil producing concessions, Guebiba/El Hajib, Rhemoura, El Ain, Cercina,
and Cercina South (together, the "Concessions"), are located onshore and shallow
water offshore near to the city of Sfax, and adjacent to Panoro's operated Sfax
Offshore Exploration Permit ("SOEP") recently acquired from DNO ASA. Through
this transformational acquisition, Panoro adds high quality oil producing assets
with existing infrastructure, well managed operations and substantial upside
potential. In addition, this Acquisition further establishes Tunisia as a new
core area for Panoro and is an important step towards the Company becoming a
material, full-cycle African focused E&P independent.
The Concessions are long life and low risk producing oil fields with a stable
production history since the 1990s and contain significant amounts of oil yet to
be recovered with estimated net 2P reserves of 8.1 million barrels as of 30 June
2018 based on a competent person's report prepared by Gaffney, Cline &
Associates ("GCA"). The Concessions benefit from low operating costs of
approximately $12 per barrel, robust downside protection and attractive fiscal
terms. GCA estimates 2P NPV10 of the Target of approximately $92 million from 1
July 2018, and additionally the Target generated some $10 million in free cash
during the first half of 2018. The Buyer also inherits a significant materials
and drilling inventory valued by the Seller at $5 million as of 1 January 2018.
The remaining interest in the Concessions and TPS is held by ETAP, the Tunisian
national oil company. The Concessions are currently jointly-managed and jointly
-operated by ETAP and the Target through TPS, a long standing and respected
joint-venture operating company (the "JV"). TPS is located in the city of Sfax
and has approximately 130 employees. Panoro will have the right to appoint the
Deputy General Manager as well as the Development Manager in TPS. The future
strategy and work programme at TPS will be jointly managed by Panoro and ETAP
and the JV has already identified several opportunities to enhance production
and increase reserves from the Concessions.
Due to the location adjacent to the SOEP permit and its extensive available
infrastructure, the Concessions create a unique opportunity for Panoro to unlock
the development and exploration potential in the SOEP permit through tie-in to
the existing TPS infrastructure and pipeline system. The combination of the
Concessions and SOEP provides material synergies and visible development growth
for the aligned benefit of Panoro, ETAP and Tunisia. As announced on 31 October
2018, Panoro is planning to drill the Salloum West-1 well in the SOEP permit in
H1 2019. This well is subject to the entry into a second renewal period of the
SOEP permit for a period of 3 years. Advanced discussions for the renewal are
ongoing with Tunisian Authorities.
The purchase price to be paid to OMV is $65 million (the "Price"), with an
effective date of 1 January 2018. Panoro estimates that upon completion,
projected to take place on or about 15 December 2018, there will be a working
capital adjustment of the Price by approximately $15 million in favour of Panoro
representing the strong cash flow generation from the effective date to the
completion date. The net consideration will be financed through a combination of
debt and equity financing, and the introduction of a strategic co-investor
across Panoro's Tunisian business.
Mercuria Energy ("Mercuria"), one of the world's largest independent energy
traders, has a long term strategic relationship with Panoro, and is providing an
acquisition loan facility of $27 million to the Buyer. The loan will amortise
over a period of 5 years, and carries an annual interest rate of LIBOR plus 6%
per annum. In addition, Panoro has secured from Mercuria an additional junior
loan facility for a further $8 million, which the Buyer might decide to drawdown
at a later stage. The junior loan facility is being made available against the
issuance of $320,000 worth of Panoro shares issued in conjunction with, and in
addition to the shares issued in, the Private Placement (as defined below).
Mercuria will also provide crude oil marketing and oil hedging services to the
Buyer, as part of this transaction. Panoro and Mercuria have signed binding
commitment letter for this debt financing subject to documentation and certain
customary conditions precedent being fulfilled.
The Acquisition is being made by Panoro together with a subsidiary of Beender
Petroleum Limited ("Beender"), a privately held oil and gas company focused on
proven oil fields with upside, which is part of the Beender group of companies,
founded and fully controlled by Tunisian energy investor, Mr. Slim Bouricha.
Panoro and Beender have entered into a strategic agreement whereby they will
jointly pursue all Tunisian growth opportunities on a 60/40 basis through a new
holding company Sfax Petroleum Corporation AS ("Sfax Petroleum"), which is the
holding company of the Buyer and the recently acquired Panoro Tunisia
Exploration AS (previously DNO Tunisia AS). Under a share subscription
agreement, Beender will subscribe in cash for shares in Sfax Petroleum, on the
same terms as Panoro, giving it a 40% interest, and will fund its pro-rata share
of the Buyer's equity requirement at the completion of the Acquisition,
estimated to be $11 million. Through its subscription for shares of Sfax
Petroleum, Beender will acquire a pro rata share of all benefits and liabilities
associated with all of Panoro's Tunisian business. In conjunction with the share
subscription agreement, Panoro and Beender have agreed a shareholder agreement
which sets out the basis for the operation and governance of Sfax Petroleum.
The remaining equity financing required by the Buyer to conclude the Acquisition
is approximately $17 million which includes additional working capital
requirement at the Target. This will be provided by Panoro's 60% contribution
through Sfax Petroleum. As separately announced today, Panoro is launching an
equity private placement of $30 million (the "Private Placement") to fund its
share of the Acquisition, development capital principally for Gabon and Tunisia
and general corporate purposes, as further described in a separate press
release.
John Hamilton, Chief Executive Officer Panoro said: "Following the completion of
the DNO Tunisia AS transaction this summer, we are extremely pleased to announce
our second acquisition in Tunisia with the purchase of OMV Tunisia Upstream GmbH
from OMV. The acquired company holds high quality producing oil concessions with
low decline rates and low breakeven levels, and generate strong cash flow. The
five oil producing concessions, Guebiba/El Hajib, Rhemoura, El Ain, Cercina, and
Cercina South perfectly complement our existing business in Tunisia,
specifically the adjacent Sfax Offshore Exploration permit. This accretive
acquisition is in line with our announced strategy to expand further in Tunisia
and highlights our determination to continue building a leading international
independent exploration and production company focused on Africa".
The acquisition of the Target will trigger requirements pursuant to Oslo Børs'
Continuing Obligations to provide an Information Memorandum, which will include
pro forma financial information, within 30 trading days from this announcement.
As Panoro is also proposing the Private Placement with a repair issue offering,
which will trigger a requirement to publish a listing and offering prospectus,
Panoro expects to publish, within 30 trading days, a joint prospectus and
Information Memorandum.
Pursuant to section 3.4 of the Continuing Obligations of Oslo Børs', Panoro
hereby provides the following information as a "detailed stock exchange
announcement" summarising the main terms of the Acquisition:
- Parties to the agreement: OMV Exploration and Production GmbH as seller,
Panoro Tunisia Production AS as buyer, and Panoro as guarantor.
- Consideration, form and timing of settlement and financing:
· Agreed consideration of $65 million, expected to be adjusted downwards by
approximately $15 million due to working capital adjustments.
· Net consideration of approximately $50 million plus required working capital
to be financed by approximately $28 million of new equity in Sfax Petroleum and
a $27 million loan from Mercuria.
· The $28 million of new equity in Sfax Petroleum will be funded pro rata by
Panoro and Beender, with Panoro's 60% share (approximately $17 million) being
funded by net proceeds from the Private Placement.
- Panoro expects to complete the acquisition of the Target on or about 15
December 2018, shortly after the Private Placement has been completed, however
no assurances can be given that completion will be achieved.
- Business to be acquired and key financial information:
· Panoro newly incorporated subsidiary Panoro Tunisia Production AS will
acquire (i) 100% of the shares in the Target, which owns the Concessions (as
defined above), and (ii) 49% of the shares in the JV managing company TPS. All
employees are and will continue to be employed by TPS. The Concessions have only
recently been transferred to the Target and have previously not been subject to
separate financial reporting. The Target only has audited statutory accounts for
the year ended 31 December 2017, which included limited activity during the year
and only had net assets of EUR 25,797 and a loss for the year of EUR 9,299
resulting from recognition of the incorporation expenses.
· Since transfer of the Concessions to the Target, with effect from 1 January
2018, the following key information has been extracted, without material
adjustments, from the unaudited management accounts of the Target as of and for
the six months ended 30 June 2018:
· Net assets of $11 million
· Cash and trade receivables of $12.7 million
· After tax Profit for 1H 2018 of $4.8 million
- Significance and strategic effects of the Acquisition are referred to
above.
- No agreements for the benefit of members of the board or management of
Panoro or the Target have been or will be entered into in connection with the
Acquisition.
A corporate presentation is available on Panoro's website www.panoroenergy.com
and Panoro will hold a conference call for Investors at 8.30am CET on 07
November 2018. Details of the conference call will be announced and circulated
separately.
This announcement is made pursuant to section 5-12 of the Securities Trading Act
and section 3.4 of Oslo Børs' Continuing Obligations.
Enquiries:
John Hamilton, Chief Executive Officer
Qazi Qadeer, Chief Financial Officer
Tel: +44 203 405 1060
Email: investors@panoroenergy.com
About Panoro Energy
Panoro Energy ASA is an independent E&P company based in London and listed on
the Oslo Stock Exchange with ticker PEN. The Company holds high quality
production, exploration and development assets in Africa, namely the Dussafu
License offshore southern Gabon, OML 113 offshore western Nigeria and Sfax
Offshore Exploration Permit and the Ras El Besh Concession, offshore Tunisia.
For more information visit the Company's website at www.panoroenergy.com.