• Brage acquisition expected to be completed in end-November 2021
• No outstanding queries anticipated from authorities
• Increase in oil prices will have a positive effect on the transaction going forward
• Increase in equity in PL433 Fogelberg discovery from 13.3 per cent to 15.65 per cent will further strengthen contingent resources asset base
Rex International Holding Limited, a technology-driven oil exploration and production company, wishes to update that the completion of Rex’s 90 per cent subsidiary Lime Petroleum AS’s (“LPA”) acquisition of 33.8434 per cent of the Brage Field (the “Acquisition”) is now expected to be completed in end-November 2021. LPA has been actively engaging the authorities and does not anticipate any further outstanding queries regarding the Acquisition. The effective date of the Acquisition, upon completion, will be deemed to have taken place on 1 January 2021, as is the norm for transactions in the Norwegian Continental Shelf.
Mr Dan Broström, Executive Chairman of Rex International Holding, said, “Oil prices were around US$70 when the Acquisition was first announced in June 2021 and have since increased to above US$80. The rise in oil prices will have a positive effect on the transaction and LPA and the Group’s revenue going forward. Upon completion, the Acquisition will add about 3,440 barrels of oil equivalent per day (net) to the Group’s current oil production in Oman and LPA’s revenue from its share of production from the Brage Field, with effect from 1 January 2021, will be added to Rex’s books for the six-month period ending 31 December 2021 and for the financial year ending 31 December 2021. LPA’s deferred tax assets and tax refund receivables will total NOK 644 million (approximately US$77 million) as at 1 January 2021, upon completion of the Acquisition.”
On 15 June 2021, LPA entered into a conditional sale and purchase agreement with Repsol Norge AS (“Repsol”), to acquire Repsol’s 33.8434 per cent interests in the Brage Field, for a post-tax consideration of US$42.6 million. In July 2021, LPA completed the issuance of NOK 500 million (approximately US$60 million) of 2.5-year senior secured bonds (the “Bonds”), a portion of which would be used to partly finance the Acquisition. The Bonds were oversubscribed by more than 100 per cent and books were closed within three days.
Of note, there was a change of government in Norway on 14 October 2021, following general elections
in the country in mid-September 2021.
Separately in the North Sea, LPA’s call option for the right to a 20 per cent farm-in to the Lyderhorn
PL1041 licence had lapsed on 1 October 2021.
In the Norwegian Sea, LPA has increased its interest in PL433 Fogelberg from 13.3 per cent to 15.65 per cent, after taking up its proportional share of DNO’s interest in the partnership as of 1 September 2021. The licence, which contains the Fogelberg discovery, is now operated by Spirit Energy Norway AS and the other partner company is PGNiG Upstream Norway AS. The PL433 partnership is moving the discovery towards production with the submission of a Plan for Development and Operations (PDO) likely in end-2022, and production start-up potentially in 2025.
Meanwhile, the drilling of the Fat Canyon prospect in the Norwegian Sea licences PL937/B, in which LPA has 15 per cent interests, started on 29 September 2021 and is ongoing. The well should take at least 40 days to complete.