Crown Energy has entered into an agreement dated 20 October 2021 under which the
\npurchaser has the right to acquire (or pre-empt any sale of) Crown’s up-stream oil and
\ngas assets (except for operations in South Africa, where the Company has an existing
\npartnership agreement).<\/p>\n
Under the terms of the Agreement, the purchaser under the Agreement the Buyer has the right to acquire (and\/or is granted rights applicable in the event of Crown Energy’s disposal) of the Company’s up-stream oil and gas assets, including all associated claims and excluding licensed operations in relation to Block 2B in South Africa where the company has 10% working interest. Any such acquisition will be effected through the acquisition of the entire issued share capital of the relevant subsidiary entities.<\/p>\n
Crown Energy has thus sold its 100% owned Manja block 3108 (onshore exploration licence on the western side of Madagascar) and an onshore exploration and production license over an area of 24,000 square kilometres located in northern Iraq south-west of Kurdistan.<\/p>\n
![\"\"](\"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2021\/10\/Madagascar-Manja-Block.jpg?resize=240%2C227&ssl=1\")
The Manja block covers an area of 7,180 square kilometres and has several structures were identified and the largest is in the north-western part of the licence area. This structure may contain up to 1,250 million barrels of oil, and it is situated at a depth of 3,500 metres. Gas was found in the southern part of the licence area back in the 1950\u2019s. In recent years, major gas finds have been found in an adjoining licence area to the south.<\/p>\n
Exploration Block 2B in South Africa is located offshore on the Atlantic coast just\u00a0 south of the border with Namibia. A small oil discovery was previously made in the exploration area. As a result, the next step in this licence\u00a0 will be to drill an appraisal well to ascertain the size, extent, and production volumes, and thus establish that this is a commercially strong oil project.<\/p>\n
The total consideration amounts to US$450 million before deduction of transaction
\ncosts. Under the terms of the Agreement the Buyer will pay to the Company within 5
\nBusiness Days an initial consideration of US$75 million, which has been paid by way of
\nnon-refundable advance payment for the acquisition and\/or the grant of rights in respect
\nof the relevant oil & gas assets.<\/p>\n
In addition to the Initial Consideration, the Buyer is obliged to pay an additional US$8
\nmillion to the Company on each 6 month anniversary of signing the Agreement with a
\nfinal payment of US$33 million on the 5 year anniversary, up to an aggregate of US$105
\nmillion (the Additional Consideration). The Additional Consideration is also paid by way
\nof non-refundable advance payment.<\/p>\n
Following the acquisition of the initial subsidiary entity, the Buyer shall also pay up to
\nUS$270 million in earn-out consideration during the earn out period in case certain
\nmilestones are achieved.<\/p>\n
Any acquisition of a subsidiary entity will be subject to regulatory approval and
\ncustomary closing conditions. It is expected that completion of the first acquisition
\ncontemplated shall occur prior to 20 October 2026.<\/p>\n
Pierre-Emmanuel Weil, Chairman of the Board, commented: \u201cWe are very proud today.
\nThis transaction shows Crown Energy\u2019s ability to create significant value from its assets
\nand to create a bright future\u201d.<\/p>\n
<\/p>\n