Sea Dragon Energy Inc. announces that further to its press release of April 30, 2012, Sea Dragon has entered into a Second Amended and Restated Share Purchase Agreement (the Second Amended Agreement) with Golden Crescent Investments Ltd. (Golden Crescent) whereby Sea Dragon will acquire, directly or indirectly, all of the issued and outstanding shares of National Petroleum Company Egypt Limited (the Acquisition).
Revised Terms of the Acquisition
Under the terms of the Second Amended Agreement, Sea Dragon will have until August 8, 2012 to complete the Acquisition (subject to a 10 day extension). Golden Crescent will be entitled until August 1, 2012, to solicit and entertain alternative proposals. In the event that Golden Crescent receives a proposal it wishes to accept prior to August 1, 2012, it may terminate the Second Amended Agreement without any: (a) penalty or payment in favour of Sea Dragon of the previously contemplated termination fee; or (b) right of Sea Dragon to match any alternative proposal.
In addition, prior to August 1, 2012, Golden Crescent may, at its option without terminating the Second Amended Agreement and in consultation with Sea Dragon, seek a farm-in partner for the North El Maghara concession (to a maximum participating interest of 50% of such concession), as well as a buyer for its 12.75% participating interest in the South Ramadan concession. Should any such transaction be completed, any cash consideration received therefor will be used to fund the development of the North El Maghara concession, certain work undertaken by National Petroleum Company South Abu Zeneima Ltd. and/or South Abu Zenima Petroleum Company (Petrozenima), as applicable, or cash call obligations issued by the Offshore Shukheir Oil Company (the joint operating company for the Shukheir Marine concession) and/or the South Ramadan concession management committee or will remain, directly or indirectly, with NPC Egypt and will not be included as part of the working capital adjustment between Sea Dragon and Golden Crescent at closing.
In addition, under the terms of the Second Amended Agreement, the parties have agreed that Sea Dragon shall oversee ongoing detailed engineering work on the Muzhil Field prior to closing and for the amount of US$2.5 million deposited by Sea Dragon in escrow upon the execution of the original share purchase agreement between Sea Dragon and Golden Crescent dated January 6, 2012 (the Escrow Amount) to be released from time to time to satisfy third party costs that may be incurred by NPC SAZ and/or Petrozenima with respect to the development of the Muzhil Field.
In addition, Sea Dragon has released US$500,000 (the Release Amount) of the Escrow Amount to Golden Crescent concurrently with the execution of the Second Amended Agreement on account of additional legal fees incurred by Golden Crescent in amending the terms of the Acquisition. In the event that the Acquisition does not proceed and non-completion fee becomes payable to Golden Crescent under the terms of the Second Amended Agreement, only the balance of the Escrow Amount (after payment of: (i) all third party obligations incurred by NPC SAZ and/or Petrozenima with respect to the development of the Muzhil Field as aforesaid; and (ii) the Release Amount) will be paid to Golden Crescent. Due to the utilization of the Escrow Amount to pay for ongoing work by NPC SAZ and/or Petrozenima on Muzhil Field, the extension of the closing date of the Acquisition is not expected to have a detrimental effect on the anticipated date of Muzil Field first oil.
Other than the foregoing amendments, the material terms and conditions of the Amended and Restated Share Purchase Agreement dated March 19, 2012, including the completion prior to closing of the proposed International Finance Corporation financing announced by the Corporation on January 31, 2012, the receipt of the necessary consents and approvals from Sea Dragon’s senior secured creditors and the completion of certain amendments to Sea Dragon’s senior secured reserve-based credit facility agreement and related agreements and the receipt of all necessary regulatory and stock exchange approvals, remain unchanged.