Page 11 - AsianOil Week 12

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Oilex’s asset sale to Doriemus at risk
FINANCE & INVESTMENT
AUSTRALIAN independent Oilex has warned that its planned sale of assets in Aus- traliatoDoriemusmayfallthroughfollowing the withdrawal of the latter company’s pro- posed capital raising.
Oilex had intended to sell its 79.33% interest in petroleum exploration licences (PELs) 112 and 444 in the South Australian Cooper-Ero- manga Basin, as well as an option to acquire the outstanding 20.66%, to UK-based Doriemus. Doriemus was also to receive the right to buy 27 petroleum retention licences (PRLs) from Senex in the Northern Oil and West Gas Fairway.
The deal was subject to Doriemus success- fully raising at least AUD3.5mn ($2.1mn), but the company said on March 24 that it would not be proceeding with the capital raising after certain investors failed to settle their committed funds pursuant to their subscription agreements.
Oilex said it was in talks with Doriemus on revising the timetable for the deal’s completion,
adding that it was also discussing the potential revision of financing and commercial terms with “relevantstakeholders”.
Under the original deal, Doriemus was sup- posed to issue 28.3mn CHESS depositary inter- ests (CDIs) – equivalent to the same number of shares – to Oilex. Oilex said at the time that the shares were worth AUD764,000 ($463,000) based on Doriemus’ closing share price on Janu- ary 28 or AUD2.4mn ($1.45mn) based on finan- cial statements for the first half of financial year 2019-2020.
In addition to the AUD3.5mn placement, Doriemus also pledged to undertake a priority offer to eligible existing Doriemus and Oilex shareholders for up to an additional AUD1.5mn ($908,000) of Doriemus shares on the same terms as the placement.
Doriemus was also to assume existing aban- donment liabilities for the PRLs, estimated at AUD1.1mn ($666,000), future PRL fees as well as any work commitments including well com- mitments at PELs 112 and 444.
Oilex managing director Joe Salomon said: “Both companies would benefit from the completion of a proposed transaction on Oilex’s Cooper-Eromanga Basin interests and we are currently exploring alternative structures with Doriemus.”™
Santos slashes spending
PROJECTS & COMPANIES
AUSTRALIAN developer Santos is planning to slash capital expenditure this year and delay a major natural gas development owing to the oil price collapse.
The company said on March 23 that it intended to cut capex by $550mn, or 38%. This will comprise a $200mn cut in planned capex in the base business, which was forecast at $950mn in January. The base business excludes the acqui- sition of ConocoPhillips’ northern Australia and Timor-Leste gas assets and subsequent stake sell- down to South Korea’s SK E&S.
Another $350mn will be slashed from the company’s $500mn budget for the Barossa, Dorado and PNG LNG projects. As previ- ously reported, the development partners have already suspended plans for the PNG LNG expansion.
Santos managing director and CEO Kevin Gallagher said the company expected to defer a final investment decision (FID) on Barossa owing to the coronavirus (COVID-19) pan- demic and low oil prices. The company will revisit the FID when “business conditions improve”, the executive added.
Delaying the Barossa FID may have implica- tions for the company’s deal with SK E&S, how- ever. Santos said on March 12 that it had agreed to sell a 25% stake in the Darwin LNG terminal and the Bayu-Undan gas field once its acquisi- tion of ConocoPhillips’ northern Australian gas assets had been finalised. Santos said at the time that the deal hinged upon the successful comple- tion of the Barossa FID.
The company is now targeting a 2020 free cash flow breakeven oil price of $25 per barrel.
Week 12 26•March•2020 w w w . N E W S B A S E . c o m P11