TIDMMTA
RNS Number : 2063Y
Matra Petroleum PLC
22 January 2014
22 January 2014
Matra Petroleum plc
("Matra" or the "Company")
Operational & Acquisition Update
Matra Petroleum plc (the "Company"), the oil and gas investing
company, is pleased to announce the completion of Phase 2 of the
Company's investment in the Texas Panhandle region of the USA and
to provide an operational update.
Operational Update
The Company has established an office in Houston which is now
fully operational. Through PG-M International, LLC ("PGM-JV"), the
joint venture vehicle owned as to 50% by the Company, an
experienced executive and operating team is being put in place
including a chief operation officer, technical personnel, a
geologist, a land manager and a financial controller.
PGM-JV has already made significant operational progress with
the well workover programme with 33 wells re-opened, 18 of which
are currently producing. PGM- JV has produced over 600 bbls of oil
to date and the first oil sale of 184 barrels has been
completed.
PGM-JV is also commissioning drilling contractors, subject to
receipt of regulatory approvals, to commence further work now that
Phase 2 has completed.
Completion of Phase 2Investment
Matra's wholly owned subsidiary, Matra Petroleum U.S.A., Inc.
("Matra USA") has completed Phase 2 of the 3 phase acquisition of
interests in certain oil and gas leasehold interests in the Texas
Panhandle region of the USA through its investment in PGM-JV, a
joint venture vehicle incorporated in Texas. The acquisition is
made pursuant to a purchase agreement entered into, and announced
by the Company, on 31 October 2013 (the "Purchase Agreement").
In the course of conducting extensive due diligence prior to
closing of Phase 2, the Company discovered certain title defects.
Set out below are further details regarding the title defects and
how they have been addressed.
Maxim Barskiy, Chief Executive of Matra, commented:
"We are pleased to have completed Phase 2 of our acquisition in
the Texas Panhandle region of the USA. In recent months we have
started to see the full potential of the Texas asset which offers
considerable upfront and future value for shareholders.
Over the last few months we have undertaken an extensive due
diligence exercise on the lease titles the joint venture is
acquiring. A minority proportion of the titles have been found to
have defects but we are pleased to have reached agreement of how
the defects will be resolved so that the value of these leases is
safeguarded.
The completion of Phase 2 will allow us to further expand our
operations, fully utilising the highly experienced team that is
being put in place in Houston".
Terms of the acquisition
Under the Purchase Agreement, on 31 October 2013 Matra USA
acquired a 50% interest in PGM-JV from PSOFEI, LLC for
consideration of US$1.5 million (the "Phase 1 Investment"). In
addition, under the Purchase Agreement, subject to the satisfaction
of certain conditions (including a title defect procedure), Matra
USA agreed to make further investments in connection with the
transfer of additional assets to PGM-JV (such investments being the
"Phase 2 Investment" and the "Phase 3 Investment") and has an
option to acquire the 50% of PGM-JV that it does not already own.
Further details of the Purchase Agreement, the Phase 1 Investment,
the Phase 2 Investment and the Phase 3 Investment are contained in
the Company's announcement dated 31 October 2013.
Completion of Phase 2 Investment
Under the Phase 2 Investment, Rifle Energy LLC and Vindex
Holdings, LLC, each an affiliate of PSOFEI, LLC agreed to transfer
to PGM-JV certain oil and gas leases comprising 5,759 net acres
across the Texas Panhandle comprising Carson, Hutchinson and Moore
counties. In consideration for such transfer, Matra USA agreed to
pay to PSOFEI, LLC a total aggregate amount of up to US$9.2 million
comprising up to US$3.85 million in cash and funding of up to
US$5.35 million pursuant to a promissory note (on the terms as
provided in the Purchase Agreement) secured by PSOFEI, LLC's 50%
interest in PGM-JV. Completion of the Phase 2 Investment was
subject to customary title review and closing conditions.
Title defects and Lease Maintenance Issues
In the event that title defects relating to the assets were
identified during the title review and due diligence process, the
Purchase Agreement contains a title defect procedure whereby
defects may be addressed through the curing of such defects, the
transfer of additional assets to compensate for such defects and/or
a reduction in the consideration due. Following completion of the
title review and due diligence process in relation to the assets:
(a) held by PGM-JV at the time of the Phase 1 Investment; and (b)
transferred to PGM-JV in connection with the Phase 2 Investment
(the "Phase 1 and 2 Assets"), certain title defects were identified
in relation to the Phase 1 and 2 Assets (the "Title Defects").
Certain lease maintenance issues were also identified in the review
process.
The Company is pleased to announce that, following the
application of the title defect procedure contained in the Purchase
Agreement and agreements as to the lease maintenance issues, Matra
USA has today entered into an agreement with the same parties to
the Purchase Agreement pursuant to which the parties have agreed,
among other things, which assets are affected by the Title Defects
and how they are to be resolved.
At Phase 2 closing, PGM-JV is receiving 4,060 net acres not
subject to any Title Defect or cure, and an additional 1,036 net
acres subject to asserted Title Defects with sellers retaining the
right to cure such Title Defects. Further, at the Phase 2 closing
the sellers are retaining 663 net acres that are affected by
asserted Title Defects but subject to cure. This acreage will be
conveyed to PGM-JV if, as and when cured. Also, as to the Phase 1
Assets, the PGM-JV is retaining 140 net acres that are subject to
cure.
As a result of the Title Defects and lease maintenance issues
described above, it has been agreed that the consideration payable
to PSOFEI, LLC at the Phase 2 closing is a total aggregate amount
of approximately US$6.02 million comprised of approximately US$2.26
million in cash and funding of approximately US$3.76 million
pursuant to a promissory note (on the terms as provided in the
Purchase Agreement) secured by PSOFEI, LLC's 50% interest in
PGM-JV. The amount of the consideration may be increased (but to an
amount not exceeding the amount which was agreed in the Purchase
Agreement and set out above) in the event that Title Defects and
lease maintenance issues are cured during the relevant period.
Any Phase 1 and 2 Assets owned by PGM-JV affected by Title
Defects which are not cured within the applicable cure period shall
be assigned back to the sellers and any such assets retained by the
sellers affected by Title Defects which are cured within the
applicable cure period shall be assigned to PGM-JV.
Suspension to trading on AIM
The trading in the Company's ordinary shares continues to be
temporarily suspended until such time as the Company publishes an
admission document or the relevant transactions which would
constitute a Reverse Takeover under AIM Rule 14 otherwise no longer
proceed.
The Company anticipates the preparation of the admission
document will commence shortly and it is expected that restoration
of the Company's shares to trading on AIM will occur once the
admission document is published.
For further information, please contact:
Matra Petroleum plc c/o Pelham Bell Pottinger
Henry Lerwill 020 7861 3169
Canaccord Genuity Limited
Henry Fitzgerald-O'Connor 0207 523 8000
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Matra Petroleum (LSE:MTA)
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