14/10/2010 - 08:52

Tap raising $82m for acquisition

14/10/2010 - 08:52

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West Perth-based Tap Oil plans to raise $82 million to fund the acquisition and evaluation of oil assets in the Gulf of Thailand.

Tap raising $82m for acquisition

West Perth-based Tap Oil plans to raise $82 million to fund the acquisition and evaluation of oil assets in the Gulf of Thailand.

Tap is aiming to make a final investment decision on development of the oil fields, in which it will have a 40 per cent stake, in early 2012.

The balance is held by Pearl Energy, which is also operator of the fields.

Tap Managing Director Peter Stickland said the acquisition of two oil discoveries and a large exploration acreage position is an excellent fit with the company's existing portfolio and strategy.

"The Manora oil field is an exciting recent discovery that will be further appraised in 2011 with a
final investment decision anticipated in early 2012," Mr Stickland said.

"The concessions acquired also include the single well Rossukon oil discovery that, alongside the Manora discovery in late 2009, highlights the significant exploration upside in this 31,000km2
exploration area," he said.

Manora is estimated to contain some 24 million barrels of oil, while the three permits associated with the deal have the unrisked exploration potential in the order of 200 million barrels, including the big Rossukon dicovery made last year which will be further tested in 2011.

Analysts expect full development of the Manora field to cost in the order of $US200 million and produce 10,000 to 20,000 barrels of oil per day.

The project is expected to comprise a conventional well-head production platform with a dedicated floating storage and offloading vessel similar to Pearl's nearby Jasmine project.

Including the vendor's current free carried interest, which is capped at $US20 million, Tap's funding obligation for the development would be in the order of 35 per cent, or around $US70 million.

 

Company announcement below:

ACQUISITION OF 75% OF NORTHERN GULF PETROLEUM PTE LTD
(OIL FIELD AND EXPLORATION ASSETS IN GULF OF THAILAND)
AND EQUITY RAISING

 Northern Gulf holds a 40% interest in the undeveloped Manora Oil Field - estimated at
24 million barrels (mmbbl) of oil for 100%1
 Northern Gulf also holds a 40% interest in the Rossukon oil discovery and over 200
mmbbls of cumulative unrisked exploration potential
 Immediate exploration and appraisal program with up to 8 wells in the next 15 months
 Potential to triple Tap Oil's reserves within 12 months
 A$13m institutional placement and A$69m accelerated non-renounceable 1 for 2
entitlement offer

Tap Oil Limited today announced the acquisition of 75% of the issued capital of Northern Gulf Petroleum Pte Ltd ("Northern Gulf") and a capital raising of up to approximately A$82 million.

The proceeds of the raising are to facilitate the acquisition and exploration, appraisal and pre-FID engineering costs leading to an FID decision in early 2012. Northern Gulf holds a 40% interest in three petroleum concessions in the Gulf of Thailand.

Acquisition
The petroleum concessions include the Manora oil field (estimated at 24 mmbbls1) which was
discovered in late 2009 and is actively being appraised. It is expected to reach a development
decision in early 2012.

Experienced international operator and operator of the nearby Jasmine field, Pearl Energy, is
operator of all of the acquired licences and holds the remaining 60% interest in the petroleum
licences.

Consideration for the acquisition includes:
 an upfront cash payment of US$25.0m (A$25.4m2); and
 US$12.5m (A$12.7m2) in Tap ordinary shares issued by way of placement to the owner of
Northern Gulf priced at A$0.95 which is the 10 day volume weighted average price (VWAP)
prior to 13 October 2010. These shares are subject to an escrow period of 2 years.

Subsequent payments from Tap to Northern Gulf are contingent on achieving milestones at the
Manora project.

Peter Stickland, Tap's Managing Director and CEO said that the acquisition of two oil discoveries
and a large exploration acreage position is an excellent fit with Tap's existing portfolio and
strategy.

"The Manora oil field is an exciting recent discovery that will be further appraised in 2011 with a
final investment decision anticipated in early 2012," Mr Stickland said.

"The concessions acquired also include the single well Rossukon oil discovery that, alongside the Manora discovery in late 2009, highlights the significant exploration upside in this 31,000km2
exploration area," he said.

Tap currently sees over 200 mmbbls of cumulative unrisked follow up potential.

Placement and Entitlement Offer
Tap intends to undertake an equity raising of up to approximately A$82 million via an institutional
placement and an accelerated non-renounceable entitlement offer.

The equity raising will be used to provide funding for the acquisition and subsequent exploration,
appraisal and pre-development studies in the acquired assets. Any additional funds will be used
for general working capital purposes and to support Tap's existing exploration program.

The raising comprises a A$13 million institutional placement ("Placement") and a A$69 million 1
for 2 non-renounceable pro-rata entitlement offer ("Entitlement Offer") to all eligible shareholders.

The Placement and the institutional component of the Entitlement Offer ("Institutional Entitlement
Offer") totalling A$50 million are fully underwritten.

Under the Entitlement Offer, eligible shareholders are invited to participate on a pro-rata basis to
their existing holdings by subscribing for 1 new Tap share ("New Share") for every 2 Tap shares
owned, at a price of A$0.81 per share ("Entitlement"). An offer document setting out the terms of
the Entitlement Offer has been lodged with the ASX today. Eligible shareholders will be sent a
copy of the offer document and application form on 21 October 2010.

The offer price of A$0.81 represents a discount of 13.8% to Tap's closing price on 13 October
2010 and a discount of 9.7% to the theoretical ex-rights price. All New Shares will rank equally
with existing shares from allotment.

UBS AG, Australia Branch (UBS) is the Sole Lead Manager, Sole Underwriter and Sole
Bookrunner to the Placement and Institutional Entitlement Offer and has entered into an
underwriting agreement with Tap in relation to approximately A$50 million of shares.

 

 

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