Ophir Energy has announced that the transaction reported on 14 November 2013 to sell a 20% interest in Blocks 1, 3 and 4, Tanzania to Pavilion Energy has now completed.
The company has received cash of US$1.255 billion reflecting the purchase price consideration of US$1.25 billion plus a completion adjustment of US$5 million to reflect interest and working capital movements since the effective date of the transaction of 1 January 2014. A further US$38 million is payable following the final investment decision in respect of the development of Blocks 1, 3 and 4, currently expected in 2016.
A tax liability will be incurred on the transaction in Tanzania. The timing of the payment will be finalized after discussion with the relevant tax authorities. Net proceeds after tax from the transaction are expected to be ca. US$1.0bn based on Management estimates. This estimate will be subject to finalization of the 2013 and 2014 corporate tax returns which impact the basis of the calculation with respect to allowable losses arising from brought forward and current year expenditure.
Ophir adds that the proceeds from the transaction will support its forward plans which includes investing in a number of new opportunities that are under consideration and have transformational growth potential. This is in addition to having the flexibility to rapidly capitalize on any exploration success from the forward drilling programme which is well funded from its existing cash resources.
“We are delighted to welcome Pavilion Energy into the Tanzanian LNG development across Blocks 1, 3 and 4. The partial monetisation of our interests is in keeping with Ophir’s strategy of minimising exposure to development capex and realising the value created from exploration success at the appropriate time” Ophir Energy CEO Nick Cooper said.
Management says it remains committed to maximising and delivering returns to shareholders and the Board continues to monitor closely the capital needs of the business and the appropriate level of cash liquidity.[twitter-follow screen_name=’oilnewskenya’]