The price that Empire Oil & Gas will pay, to buy out joint venture partner ERM Power from their Perth Basin assets, has been cut to $15.1 million.
Brisbane-based ERM Power announced in September that it had agreed to sell its Perth Basin assets to Empire for $16.34 million.
It said at the time that the price may be adjusted subject to Empire’s share price performance.
Neither company was able to explain today exactly how the price had been adjusted.
The assets include ERM’s interests in tenement EP 389, including the Red Gully gas and condensate plant, and seven other tenements.
ERM, which is a 10 per cent shareholder in Empire, has also agreed to extend the repayment date for the loan it is providing to the local company to fund the buy-out.
Empire chief executive Ken Aitken described the lower price as a windfall for Empire shareholders.
“This deal, which is the first step, is the key to unlocking the true value of our exploration acreage because it will pave the way for Empire for its second step, which is to secure high quality farm-in partners and investors,” he said.
“It will also give Empire 100 per cent ownership of our flagship Red Gully project and the growing cashflow it is expected to generate when it starts delivering gas to Alcoa.”
If Empire shareholders approve the transaction, the Claremont company plans to raise $17.5 million through a placement to ERM and a rights issue to all shareholders.
This will lift ERM’s stake in Empire to 19.9 per cent.
Earlier this week, Empire said it had gained regulatory approval to delay its annual general meeting, so that it has sufficient time to prepare the notice of meeting and obtain the independent expert’s report on the ERM transaction.
It also announced it has been granted petroleum production licences over the two exploration blocks that cover its Red Gully-1 and Gingin West-1 producing fields and the Red Gully plant.
Mr Aitken said this was a significant milestone in its transformation from an explorer to a significant producer of gas and condensate.
