Oil and gas explorer New Standard Energy has freed itself of debt after selling its Cooper Basin and US assets to Sundance Energy in a deal valued at $24 million.
Sundance will wholly acquire a subsidiary of New Standard, which owns the Atascosa project in the Eagle Ford, Texas, as well as the company’s working interest in the Colorado County assets and its 17.5 per cent stake in the PEL 570 permit in the Cooper Basin.
In addition, Sundance will immediately take ownership of New Standard’s 11.4 per cent shareholding in Elixir Petroleum for about $243,000.
Under the terms of the deal, Sundance will assume all debt and liabilities associated with the Atascosa project - about $20.7 million – and all forward obligations associated with PEL 570, and will issue 6 million shares to New Energy, valued at $3.18 million.
“The transaction will eliminate all New Standard debt and provide sufficient ongoing liquidity to allow the company to explore options for future development of its WA onshore assets,” New Standard said.
If the deal is successful, New Standard plans to find a partner for its projects in the Canning and Carnarvon basins.
New Standard chairman Arthur Dixon said the company’s growth plans and focus on the US had been affected by the speed and intensity of the collapse in global oil prices.
“The board recognised the significant of the changed commercial environment and late in 2014 initiated an extensive and intense process to seek and evaluate corporate transactions, joint ventures and asset sales or swaps for all of the company’s assets,” he said.
“The scrip component of this transaction does provide our shareholders with ongoing upside exposure to the US assets, but as part of a much broader and more mature portfolio that Sundance has developed.”
Mr Dixon said given the company’s debt size, repayment schedule and upcoming reserves recertification, the ability to access additional funds and continue as a going concern was uncertain at best.
“Therefore, extinguishing our debt and extracting some value for our US and Cooper Basin assets is the best option available and will provide access to sufficient liquidity to allow us to assess the best options to progress out WA assets,” he said.
New Standard purchased a 52.5 per cent stake in the PEL 570 permit in December 2013 from Magnum Hunter Resources for $2.6 million in cash and 15 million shares, and the Atascosa project for about $30.7 million.
In October last year, it divested a large portion of its interest in PEL 570 to Santos for $7.5 million, leaving it with a 17.5 per cent stake.
New Standard shares were 140 per cent, or 0.7 cents, higher to 1.2 cents at the close of trade.