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Panoro Energy chairman Julien Balkany underlines African ‘growth strategy’ following PetroNor deal

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Panoro Energy (Panoro) has agreed to sell its interest in the OML 113 offshore licence, holding the preeminent Aje oilfield, to PetroNor E&P announced earlier this week its chairman Julien Balkany.

The deal could fetch a total consideration of up  to $35m, with $10m being paid at closing and a contingent consideration of up to $25 million based on future gas production.

The announcement, made on Monday, 21 October 2019, disclosed  that PetroNor will purchase two subsidiaries – Pan-Petroleum Services Holding and Pan-Petroleum Nigeria Holding – which own 100 per cent of Pan-Petroleum Aje, the local company holding Panoro’s stake in OML 113, offshore the city of Lagos in Nigeria.

A new and restructured joint-venture  company is also expected to be set up, with PetroNor finalising agreements with Yinka Folawiyo Petroleum (YFP) – which operates OML 113 – that will see them take the lead on making sure the next phase of developing Aje comes to fruition in an effective and rapid manner.

Discovered in 1997, Aje ranges in depth from 100m to 1500m and has multiple oil, gas and gas condensate reservoirs in the Turonian, Cenomanian, and Albian age sandstones.

After coming onstream in May 2016, through the leased FPSO Front Puffin, it had produced a total of 3.6 MMbbl of oil by August 1 this year.

Current output is around 3,000 bopd of oil, and includes some condensate, although that number is expected to rise in the wake of the next development phase.

The transaction is still subject to agreements between PetroNor and YFP, the authorisation of the Nigerian Department of Petroleum Resources and the consent of the Nigerian Minister of Petroleum Resources.

That is expected to take several months, and a long stop date of December 31, 2020 has been agreed, after which either party can terminate the transaction.

The contingent payment will come into play once the Pan-Aje subsidiary has covered all costs spent to the date of completion.

PetroNor would then pay Panoro $0.15 per 1,000 cubic feet of gas produced for sale from the Aje field, up to a maximum of $25mn.

Panoro does expect to generate a net gain on the transaction, before distributing the shares in PetroNor among its shareholders via a special dividend.

Should the deal go ahead, it would mean Panoro would have no further Nigerian assets, although chairman Julien Balkany was quick to stress that Panoro remains fully committed to continue growing in Africa and will redeploy financial resources to further expand on the continent.

“Panoro has been reviewing options in relation to its Nigerian assets with the objective of potentially unlocking value of OML 113 for its shareholders,” said Mr Julien Balkany, who was re-elected as chairman at Panoro’s AGM in May. “In addition, through the contemplated distribution of PetroNor shares to Panoro shareholders, this transaction provides Panoro’s shareholders with the opportunity to directly retain exposure to OML 113 and also benefit of the upside of Petronor producing asset offshore Congo.

John Hamilton, chief executive officer of Panoro added:“We are extremely pleased to have reached this win-win agreement with PetroNor that perfectly suits both parties’ ambitions.

“Aje was a non-core asset for Panoro and allows us to further focus on expanding our organic operations in Tunisia and Gabon while retaining exposure to the considerable upside at OML 113 through the deferred consideration.

 



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