EOR completes renegotiation of CEP acquisition price

By Romel S. Gurky

ASX-listed Enhanced Oil and Gas Recovery Limited (EOR) said Tuesday that it has re-negotiated the purchase price for the acquisition of Centre Energy Petroleum Limited (CEP) to reflect the current market price for oil and gas while maintaining shareholder value going forward.

CEP holds an 85 percent economic/participatory interest in PT Benuo Taka Wailawi (a joint venture company with PT Perusda Benuo Taka, which is owned by Penajam Paser Utara Regency administration in East Kalimantan), which is the holder of an Extended and Amended Co-operation Agreement with respect to the Wailawi oil and gas project.

The Wailawi oil and gas project covers some 30.74 square kilometers and is located in the southern part of the Mahakam Delta Complex of the petroleum producing Kutai Basin, 12km southwest of Balikpapan in East Kalimantan, Indonesia.

CEP holds the rights on behalf of the joint venture company to operate the Wailawi oil and gas project pursuant to the Extended and Amended Co-operation Agreement.

EOR first announced on September 23 it has executed a Share Purchase Agreement to acquire 100 percent of CEP from Vibrant Link SDN BHD, KEH Industrial Park SDN BHD and Union Pacific Trading Pty Ltd

EOR then said in a statement Tuesday that it has entered into a Deed of Variation in respect of the Share Purchase Agreement with the current shareholders of CEP in accordance with which:
a. The purchase price is now AU$5,110,051, which takes into account the original purchase price of AU$12.8 million adjusted to account for the current market circumstances, including the current market price for oil and gas.
b. The payment of the purchase price will be satisfied by the issue of shares to the CEP Shareholders in three stages, two of which will be performance based (Earn Out Shares), over a three year period until 30 June 2018, as follows:
- Stage One -on completion of the Share Purchase Agreement (following EOR shareholder approval), the issue of shares at the prospectus issue price per share to the aggregate value of AU$3,000,000
- Stage Two ?Issue of shares at the prospectus issue price per share to the aggregate value of $1,055,026 provided a minimum target return to EOR of US$748,245 is received from the Wailawi oil and gas project for the financial year ended 30 June 2017.
- Stage Three -Issue of shares at the prospectus issue price per share to the aggregate value of $1,055,026 provided a minimum target return to EOR of US$748,245 is received from the Wailawi oil and gas project for the financial year ended 30 June 2018.
- If the target return for the Wailawi oil and gas project is not reached for FY2017 and FY2018 but at 30 June 2019 a minimum target of US$748,245 for each financial year has been achieved on an aggregated basis, then EOR will issue the unissued balance of the Earn Out Shares to the CEP shareholders.

Editing by Reiner Simanjuntak