NuEnergy signs LOI with strategic Asian investor
Wednesday, February 12 2014 - 05:08 AM WIB
ASX-listed NuEnergy announced Wednesday that it has signed a Letter of Intent (LOI) with a strategic Asian investor for an investment in the company and a farm-in to the Rengat CBM PSC located in Riau. The company did not disclose the name of the investor.
NuEnergy said in a statement, that under the terms of the proposed farm-in transaction the farm-in party will:
1. Invest in NuEnergy via a 10% share placement at a price equal to the higher of a 15% discount to the 14 day volume weighted average price (VWAP) or 4 cents per share, raising a minimum of A$1.3 million; and
2. Pay NuEnergy US$2.7 million in cash plus provide a full carry on 3 core and 3 pilot production wells, with the full value of the carry program being estimated at US$10-12 million, in return for being assigned a 49.9% participating interest in Rengat PSC. The proposed farm-in party has extensive experience in the Coal Bed Methane (CBM) service industry and with drilling and completion techniques that can significantly enhance the productivity of the CBM wells.
Other key terms of the agreement include the following rights for the farm-in party:
1. A first right of refusal to subscribe for a further 5% of the issued capital of NuEnergy upon the company achieving a minimum specified 2C resource upgrade; and
2. The right to nominate one director to the Board of NuEnergy Gas Limited.
Key deliverables and time frames for completion of the agreement, as set out in the LOI, are as follows:
1. Due diligence completion 15 March 2014
2. Share placement agreement Finalized by 31 March 2014
3. Farm-in agreement Subject to conditions precedent, finalized by 31 March 2014
4. Conditions precedent satisfaction 31 July 2014 (subject to necessary regulatory approvals)
The total cash contribution under the proposed transaction of $4 million (minimum) will fund the drilling of additional pilot wells in NuEnergy?s South Sumatran PSCs to assist the ongoing work program to achieve commercial production.
Editing by Reiner Simanjuntak