Asset A&D

Armour Signs Binding Agreement to Acquire Oilex's Cooper-Eromanga Interests

By Deepak Sharma
June 16, 2020
2 minutes read

Brisbane-based Armour Energy Ltd. has signed a binding Share Purchase Agreement (SPA) to acquire Oilex Ltd.’s Australian subsidiary CoEra Ltd., which holds all of Oilex’s direct and indirect interests in the Cooper-Eromanga Basin.

The deal with Oilex includes the transfer of a 79.33% interest (and an option to acquire the remaining interest) in exploration licenses PEL 112 and PEL 144. The deal also includes Oilex’s rights to acquire a 100% interest in 27 additional Petroleum Retention Licences (PRLs) located in South Australia.

Previously, in January this year, Oilex had signed a binding Heads of Agreement (HoA) with Doriemus Plc for the sale of CoEra. Under the terms of this agreement, Doriemus would have assumed the obligations of Oilex under the agreement with Senex, including the assumption of existing abandonment liabilities, estimated at A$1.1 million, and the payment of future PRL annual fees.

However, in March, the transaction with Doriemus was terminated. Subsequently, on May 26th, Armour entered into a conditional binding HoA with Oilex to acquire CoEra. The HoA was subject to customary closing conditions, including the execution of definitive transaction documentation between Armour and Oilex.

Under the terms of the SPA, Armour will reimburse Oilex for A$125,000 of past costs incurred on the licenses within 60 days from closing and issue up to 34.5 million ordinary shares to Oilex priced on the volume-weighted average for a 90-day period from the date of execution of a term sheet, amounting to approximately A$906,500. As a result, Oilex will hold between a 4% and 5.5% minority shareholding interest in Armour post‐acquisition. The shares issued as consideration will be subject to a 12-month voluntary escrow.

PEL 112 and PEL 144 cover an area of 1,086 sq. km and 1,166 sq. km, respectively, and are located on the extension of the Western Flank oil fairway, the most important recent contributor to oil production in the Cooper basin, which is considered to be one of Australia’s most prolific oil producing basins, having produced approximately 1.5 billion barrels of oil equivalent (Bboe) till date.

The completion of the sale remains subject to several closing conditions, including shareholder and regulatory approvals.

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