Global Energy Sold Llanos Basin Properties

Source: www.gulfoilandgas.com 10/14/2014, Location: South America

Global Energy Development PLC, the Latin America focused petroleum exploration, development and production company with operations in Colombia, announces that on 13 October 2014, the Company entered into a conditional share purchase agreement (the "Agreement") with Platino Energy Holdings, Corp., which is a subsidiary of Platino Energy Corporation, a TSX listed oil and gas exploration company (the "Purchaser"), for the disposal of the rights and obligations of the Company's contract areas within the Llanos Basin (the "Llanos Assets") for a gross consideration of US$50 million in cash (the "Consideration").

The disposal will be effected by the sale of the entire issued share capital of the Company's wholly owned subsidiary, Colombia Energy Development Company ("CEDCO") to the Purchaser (the "Transaction"). Following a process of corporate restructuring completed earlier in the year, CEDCO holds only the assets and liabilities relating to the Llanos Assets. Due to its size and nature, the Transaction constitutes a fundamental change of business pursuant to Rule 15 of the AIM Rules for Companies and is conditional upon shareholder approval at a general meeting of the Company (the "General Meeting"). As the Purchaser is a Canadian listed entity, the Transaction is subject to approval by the TSXV. In addition, the Transaction is subject to approval by Empresa Colombiana de Petroleos S.A. ("Ecopetrol"), and various other conditions precedent.

Completion of the Transaction will allow the Company to immediately realise value in respect of its Llanos Assets. CEDCO's producing assets comprise the Group's Llanos Assets (being the Rio Verde, Alcaravan and Los Hatos contracts) which in the year to 31 December 2013 generated over 95 per cent. of the Group's cash flow. In the year ended 31 December 2013, the Llanos Assets generated a total revenue of $32 million and profit before tax of $4.7 million. The total non-current assets attributable to the Llanos segment were $75.1 million and the total non-current liabilities were $21.8 million. The Transaction will result in the Company receiving gross cash proceeds of US$50 million, which figure is to be adjusted upon closing in respect of any CEDCO operating income received, and any capital expenditure spent, by Global in the intervening period prior to closing.

The Transaction is in line with the Company's previously announced policy that it was focusing its efforts on developing its oil reserves in the Bolivar Block and the Bocachico Block located in the Middle Magdalena Basin. In March and May 2014, the Company entered into farm-out agreements in respect of the Bolivar and Bocachico assets (together, the "Farm Out Agreements") as part of this policy. Although the Farm Out Agreements are intended to partially fund the near-term development plans for the Middle Magdalena properties, further exploration and development will require additional capital.

The proceeds after the expenses of the Transaction will be used to completely eliminate the Company's outstanding debt, which has an outstanding balance of approximately US$7.5 million. The application of the remaining net proceeds will be determined following the closing of the Transaction.


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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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