Global Energy Development PLC Llanos Basin Properties - Proposed Sale (1840U)
October 14 2014 - 2:00AM
UK Regulatory
TIDMGED
RNS Number : 1840U
Global Energy Development PLC
14 October 2014
Immediate Release 14 October 2014
GLOBAL ENERGY DEVELOPMENT PLC
(the "Company" or "Global")
LLANOS BASIN PROPERTIES - PROPOSED SALE
Global Energy Development PLC, the Latin America focused
petroleum exploration, development and production company (AIM:
GED) with operations in Colombia, announces that on 13 October
2014, the Company entered into a conditional share purchase
agreement (the "Agreement") with Platino Energy Holdings, Corp.,
which is a subsidiary of Platino Energy Corporation, a TSX listed
oil and gas exploration company (the "Purchaser"), for the disposal
of the rights and obligations of the Company's contract areas
within the Llanos Basin (the "Llanos Assets") for a gross
consideration of US$50 million in cash (the "Consideration").
The disposal will be effected by the sale of the entire issued
share capital of the Company's wholly owned subsidiary, Colombia
Energy Development Company ("CEDCO") to the Purchaser (the
"Transaction"). Following a process of corporate restructuring
completed earlier in the year, CEDCO holds only the assets and
liabilities relating to the Llanos Assets.
Due to its size and nature, the Transaction constitutes a
fundamental change of business pursuant to Rule 15 of the AIM Rules
for Companies and is conditional upon shareholder approval at a
general meeting of the Company (the "General Meeting"). As the
Purchaser is a Canadian listed entity, the Transaction is subject
to approval by the TSXV. In addition, the Transaction is subject to
approval by Empresa Colombiana de Petroleos S.A. ("Ecopetrol"), and
various other conditions precedent.
The following is a summary of the Group's current oil and gas
contracts:
Middle Magdalena Assets to be Retained:
---------------------------------------------------------------------------------------------------------
Contract Country Basin Held with: Expiry Acreage Proved 2P Reserves
Name Date Reserves (mmbbls)*
(mmbbls)*
----------- ---------- ------------ ------------------- -------- -------- ----------- ------------
Middle
(Bolivar Colombia Magdalena Ecopetrol 2024 20,321 32.2 55.0
----------- ---------- ------------ ------------------- -------- -------- ----------- ------------
Middle
Bocachico Colombia Magdalena Ecopetrol 2022 54,605 11.0 40.4
----------- ---------- ------------ ------------------- -------- -------- ----------- ------------
Llanos Assets to be Sold:
Contract Country Basin Held with: Expiry Acreage Proved 2P Reserves
Name Date Reserves (mmbbls)*
(mmbbls)*
----------- ---------- ------------ ------------------- -------- -------- ----------- ------------
Agencia
Nacional
Rio de Hidrocarburos
Verde Colombia Llanos ("ANH") 2034 5,889 2.1 2.1
----------- ---------- ------------ ------------------- -------- -------- ----------- ------------
Alcaravan Colombia Llanos Ecopetrol 2021 23,802 1.3 3.4
----------- ---------- ------------ ------------------- -------- -------- ----------- ------------
Los
Hatos Colombia Llanos ANH 2034 295 0.1 0.1
----------- ---------- ------------ ------------------- -------- -------- ----------- ------------
* The reserve information for Global Energy Development PLC, as
disclosed in the Company's 2013 annual report, has been certified
by a third-party firm, Ralph E. Davis Associates, Inc. as at 31
December 2013.
Completion of the Transaction will allow the Company to
immediately realise value in respect of its Llanos Assets. CEDCO's
producing assets comprise the Group's Llanos Assets (being the Rio
Verde, Alcaravan and Los Hatos contracts) which in the year to 31
December 2013 generated over 95 per cent. of the Group's cash flow.
In the year ended 31 December 2013, the Llanos Assets generated a
total revenue of $32 million and profit before tax of $4.7 million.
The total non-current assets attributable to the Llanos segment
were $75.1 million and the total non-current liabilities were $21.8
million. The Transaction will result in the Company receiving gross
cash proceeds of US$50 million, which figure is to be adjusted upon
closing in respect of any CEDCO operating income received, and any
capital expenditure spent, by Global in the intervening period
prior to closing.
The Transaction is in line with the Company's previously
announced policy that it was focusing its efforts on developing its
oil reserves in the Bolivar Block and the Bocachico Block located
in the Middle Magdalena Basin. In March and May 2014, the Company
entered into farm-out agreements in respect of the Bolivar and
Bocachico assets (together, the "Farm Out Agreements") as part of
this policy. Although the Farm Out Agreements are intended to
partially fund the near-term development plans for the Middle
Magdalena properties, further exploration and development will
require additional capital.
The proceeds after the expenses of the Transaction will be used
to completely eliminate the Company's outstanding debt, which has
an outstanding balance of approximately US$7.5 million. The
application of the remaining net proceeds will be determined
following the closing of the Transaction.
The Agreement contains standard representations and
warranties.
General Meeting
A circular containing the details of the Transaction and a
notice convening the General Meeting, will be posted to
shareholders in due course. Once published, the Circular will also
be available to download from the Company's website at
www.globalenergyplc.com.
The purpose of the Circular will be to provide background on and
set out the reasons for the Transaction, to explain why the
directors of the Company consider it to be in the best interests of
the Company and its shareholders as a whole and to set out the
resolution to be considered at the General Meeting.
The Directors will unanimously recommend that shareholders vote
in favour of the Transaction. The Company has received irrevocable
undertakings from HKN, Inc., Global's principal shareholder and
Lyford Investments, Inc., which together are interested in
21,980,404 Global shares, representing approximately 60.87 per
cent. of the issued share capital of the Company, to vote in favour
of the Transaction.
For further information please contact:
Global Energy Development PLC
Anna Williams, Finance Director
awilliams@globalenergyplc.com +001 817 310
www.globalenergyplc.com 0240
Northland Capital Partners Limited
Matthew Johnson +44 (0)20 7382
Lauren Kettle 1100
This information is provided by RNS
The company news service from the London Stock Exchange
END
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