Dart Energy Buys Greenpark Gas Assets (UK)

Dart Energy (CBM) International Pte Limited, a wholly owned subsidiary of Dart Energy Limited has agreed to acquire all of the unconventional gas assets of Greenpark Energy Limited, comprising 22 onshore licences in the UK.

Consideration is a total of $42 million to be paid in two tranches, and made up of a mixture of cash and shares in either the intended to be listed Dart Energy International vehicle or the Company.

Greenpark is a privately held company with UK licence assets that are substantially complementary to the existing Dart acreage position in the U.K., with a similar footprint, similar CBM and shale potential, a sizeable certified 2C resource base and an early stage development option. Greenpark holds a 100% working interest in most licences, and is the operator of all licences. The transaction is subject to certain conditions which are expected to be satisfied over the coming months.

Dart has also secured an exclusive option over interests in licences prospective for CBM and shale gas held by Greenpark in Poland and Spain.

The acquisition of these assets from Greenpark comes shortly after Dart’s recently announced restructure of arrangements with BG Group in which Dart acquired the 50% interest BG Group held in 14 CBM licence areas in the U.K., thereby increasing Dart’s interest in each of those licences to 100%. Dart also secured an exclusive three month option over a 100% interest in two licence areas held by BG Group in Germany (Saxon I and Saxon II), prospective primarily for shale gas.

Dart and BG Group have also agreed Heads of Terms for a Gas Sales Agreement for up to 24BCF of gas at market price for the potential future sale to BG Group of gas developed from the 14 U.K. licence areas to be transferred to Dart. This is in addition to the Gas Sales Agreement secured with leading utility SSE in July 2011, for potential future sale of up to 45BCF of gas developed from the PEDL133 licence area. In aggregate, at the current market gas prices of approximately US$10/MMbtu, this represents potential revenue to Dart of over $700 million achievable in the next eight years, with attractive expected net cash margins. Further monetisation options in the European markets are also being considered.

The aggregate effect of these developments is that Dart has successfully executed a European consolidation strategy commenced less than a year ago, aimed at creating the leading U.K. and European CBM / unconventional gas business. The U.K / European market is characterised by large gas deficits, reliance on imported gas, stable regulatory regimes, extensive and accessible infrastructure, and amongst the world’s highest current gas prices.

Dart’s European business now incorporates:

•  a sizeable portfolio of licences in the U.K. and across Europe, prospective for CBM and shale gas;

•  a substantial resource base, including a large 2C resource position and initial 3P and 2P reserves (all independently certified);

•  several projects capable of being fast-tracked to commercial development; and

•  monetisation options in place, with more expected to follow over the next 12-18 months.

Dart intends to functionally manage the European operations as two distinct business lines: Dart Europe, which will focus on the CBM assets across Europe, and Dart International Shale, which will focus exclusively on progressing the sizeable portfolio of shale assets Dart has now either secured or has under option across Europe. This will also include seeking to participate in early-stage shale gas opportunities in other Dart markets of China, India and Indonesia, where relevant Governments have flagged potential shale licence rounds in the coming 12-18 months. Further details of Dart International Shale will be provided in the coming months.

Dart’s activity globally now consists of thee substantial regional business, each with significant acreage, scale of operations and near-term production potential:

• Dart Australia – seven CBM assets covering 23,598 km2 in New South Wales, with a core strategic focus on seeking to expand the Australian business both geographically and into other unconventional areas;

• Dart Asia – eight assets covering 7.580 km2 in aggregate, focussed on Dart’s CBM business in China, India and Indonesia, with a strong pipeline of business development opportunities in place

• Dart Europe: 41 assets / 8 regional “clusters”, covering 6,017 km2 in aggregate, focussed on Dart’s CBM business in the U.K. and continental Europe. As noted, this now includes a potentially substantial shale gas acreage position, and Dart intends to further build on this opportunity. Dart also currently has five additional licences in Europe under option, and will be considering these in the coming months.

Dart Asia and Dart Europe (including Dart International Shale) will comprise the suite of businesses that are aggregated as Dart Energy International, for which the company intends to seek a separate international listing, as previously announced.

Commenting on these various developments, Dart Executive Chairman Mr Nick Davies said:

“The agreement to acquire Greenpark’s unconventional gas assets in the U.K. and Europe is the next significant step in realising Dart’s European aspirations, and allows us to now definitively say that we have created one of Europe’s leading unconventional gas businesses, less than a year after first entering the market.

We acquired Composite Energy in February 2011, and we followed that quickly with Europe’s first significant CBM reserve certifications, a major portfolio resource upgrade which included identifying substantial shale prospects on two licences, an excellent first Gas Sales Agreement, and new licence additions in Poland and Belgium.

We then commenced drilling operations across the portfolio and are seeking to rapidly progress our flagship European project, PEDL133 in Scotland, to commercial development.

In the last 2 weeks, we have substantially enhanced these solid foundations: we have consolidated BG’s CBM position in the U.K. with ours; we have delineated a joint shale work program on PEDL 133 with BG; we have secured an option over two prospective shale licences in Germany from BG; and we have agreed heads of terms with BG for another UK Gas Sales Agreement.

And now, through acquiring Greenpark’s assets, we have added multiple licences in the U.K., many of which are contiguous to existing Dart licences, thus affording the ability to build projects of scale in a number of regional “clusters”. Greenpark also brings with it a substantial certified 2C resource and booked 3P reserves; an option over prospective licences in Poland and Spain; and a second project in our European portfolio (Canonbie) which, similar to PEDL133, is at a relatively advanced stage such that we can apply our skill to driving it forward rapidly towards commercialisation.

Dart is now a substantial unconventional gas company. We have an enviable asset base in a number of the World’s leading markets, where there is high gas demand and attractive prices, and where our assets are mostly close to existing infrastructure. Our European CBM business and within it our international shale business are a strong complement to our Australian and Asian businesses, and bring us one step closer to achieving our corporate vision: to be the leading independent global unconventional gas business.”

[mappress]

LNG World News Staff, January 2, 2012