Panoro closing Nigerian chapter following long-awaited govt’s nod
Oil and gas company Panoro Energy has received approvals from the Nigerian government for the sale of its interest in the Offshore Mining Lease no. 113 (OML 113) – located offshore Nigeria – to Oslo-listed PetroNor.
The two companies entered into a sale agreement in October 2019, allowing PetroNor to buy out Panoro’s interest in OML 113 and take over a lead technical and management role for the project to progress it to the next phases.
The deal divests Panoro of all outstanding shares in its fully owned subsidiaries Pan-Petroleum Services Holding and Pan-Petroleum Nigeria Holding for an upfront consideration consisting of the allotment and issue of new PetroNor shares with a fixed value of $10 million, plus contingent consideration of up to $25 million based on future gas production volumes.
As previously reported, these subsidiaries hold 100 per cent of the shares in Pan-Petroleum Aje Limited (Pan Aje), which participates in the exploration for and production of hydrocarbons in Nigeria and holds a 6.502 per cent participating interest, with 16.255 per cent cost bearing interest, representing an economic interest of 12.1913 per cent in OML 113, which includes the Aje field.
The Aje oil and gas field was discovered in 1996 and, following several appraisal wells, the field started production in May 2016 via the Front Puffin FPSO. According to PetroNor, there are two production wells – the Aje-4 with oil production and Aje-5ST2 with oil and gas production – along with a significant gas-condensate column ready for further development. The company’s data shows that oil production in 2020 was around 1,981 bopd.
It is worth reminding that PetroNor signed an investment agreement in December 2019 with Nigeria’s Yinka Folawiyo Petroleum (YFP) to forge a new path forward for the future development of the YFP-operated Aje field in Nigeria’s OML 113 offshore license.
The agreement entailed the creation of a joint venture firm named Aje Petroleum – 55 per cent owned by YFP and 45 per cent owned by PetroNor – aiming to revitalise and further develop OML 113 and the Aje field.
In its latest update on Thursday, Panoro reported that all government approvals – including the one from Nigeria Upstream Petroleum Regulatory Commission (formerly the Nigerian Department of Petroleum Resources) – were received for the sale of the shares of its fully-owned subsidiaries that hold 100 per cent of the shares in Pan Aje to PetroNor.
John Hamilton, CEO of Panoro, commented: “The transfer of ownership of OML 113 to PetroNor will allow Panoro to reduce and optimise its capital expenditures while preserving the ability for our shareholders to benefit from future gas successes through the distribution of shares in PetroNor to its shareholders.”
The company also explains that the receipt of government approvals satisfies the last key condition precedent for the completion of the transaction, thus, Panoro and PetroNor will now proceed with the final steps to complete it. This includes the issuance of new PetroNor shares for distribution to Panoro shareholders.
In a separate statement on Wednesday, PetroNor confirmed that upon completion of the deal, the ownership of Aje Petroleum was going to be shared between the OML 113 operator, YFP, and PetroNor on the basis of a 55 per cent and 45 per cent shareholding, respectively, with PetroNor assuming the role of the technical operator.
Jens Pace, PetroNor’s interim CEO, remarked: “The receipt of this long-awaited consent is exciting news for PetroNor and for the development of OML 113. The Aje Field Development Plan is focused on producing and commercialising gas, and has the potential to provide low emission energy corresponding to five per cent of the total power production of Nigeria.”
The transaction is expected to close within the next 90 days and, afterwards, Panoro will have no presence in Nigeria.
“Panoro is confident that PetroNor is strategically well-positioned to unlock the gas potential at Aje for the benefit of all stakeholders,” concluded Hamilton.