NGE sells PPL to Esso

 NEW Guinea Energy (NGE) Ltd will sell its interest in petroleum prospecting licence (PPL) 269 to Esso for US$40 million. 

NGE said last Friday that its wholly-owned subsidiary Kirkland Ltd has signed the agreement with Esso PNG Robin Ltd, a subsidiary of ExxonMobil.

Chief executive Grant Worner said: “Receiving US$40 million will significantly strengthen NGE’s balance sheet without diluting shareholders’ equity, which is an excellent outcome for the company and shareholders in a climate where it is difficult for junior explorers to access new funds.”

Under the sale agreement, certain rights and obligations will not become binding until a number of initial conditions precedents are satisfied over a period of 20 business days starting last Friday.

Worner said Esso is permitted to have discussions with the PPL 269 operator during this period, and has an absolute discretion to determine whether it is prepared to proceed with the acquisition of Kirkland’s participating interest in PPL 269 or not.

The initial conditions precedent are: 

(a) Esso giving Kirkland a notice that Esso wishes to proceed with the transaction; (b) Kirkland obtaining the consent of the holder of the convertible bonds in NGE; and 

(c) NGE providing a parent company guarantee to Esso.

If the initial conditions precedent is met, Esso will be required to pay a A$4 million deposit to Kirkland. 

If the initial conditions precedent are not satisfied or waived, the sale of Kirkland’s participating interest in PPL269 to Esso will not proceed.