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Statoil Australia Joint Venture - a leading global energy player with a focus on applying technology to expand the global search for unconventional hydrocarbon resources.
As announced on June 20, 2012 PetroFrontier entered into a binding farm-in agreement with Statoil Australia Oil and Gas AS whereby Statoil would farm into PetroFrontier's four existing Exploration Permits EP 103 (100% WI), EP 104 (100% WI), EP 127 (75% WI) and EP 128 (75% WI) as well as pending exploration permits EPA 213 (100% WI) and EPA 252 (100% WI) in the Southern Georgina Basin in Australia's Northern Territory (collectively the "Permits").
Statoil is a highly regarded international technology-oriented energy company focused on upstream oil and gas operations and currently produces 2 million barrels of oil equivalents per day. They are actively involved in major unconventional plays in North America (Marcellus, Eagle Ford and Bakken) and continue to bring exceptional technical and operational expertise to PetroFrontier. Statoil has high ambitions for international growth and is active in 35 countries around the world. Statoil's shares are listed on both the Oslo Bors ("STL") and the New York Stock Exchange ("STO") with a market capitalization of approximately US$72.0 billion and have 23,000 employees worldwide. Statoil is approximately 70% owned by the Norwegian government.
In December 2012, in light of the challenging state of the capital markets and recent operational results, PetroFrontier initiated a process to identify, examine and consider strategic alternatives for the company. On June 11, 2013 PetroFrontier announced that it had agreed to "amend" the existing farmin agreement with Statoil whereby Statoil could spend up to US$175 MM by the end of 2015 before PetroFrontier will be required to contribute further.
AMENDED FARMIN AGREEMENT - JUNE 2013
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Phases (end)
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1/2A
(2012 - 2014)
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2B
(2015)
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3
(2016)
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Statoil spends
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US$65.0 MM
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US$30.0 MM
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US$80.0 MM
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Statoil Working Interest (***** %)
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30%
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25% (55%)
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25% (80%)
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Implied Price/Share
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PFC Common Shares outstanding
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79.4 MM
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Implied EV - 100% ($175.0 MM/80%)
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$218.75 MM
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PFC Implied EV ($218.75 MM*20%)
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$43.75 MM
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PFC Estimated Current Working Capital
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$10.0 MM
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PFC Implied Market Capitalization
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$53.75 MM
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$0.68 per PetroFrontier Share
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Implied Land Value/Acre
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2012 - 2014 Implied Land Value = $65.0/30%
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$216.67 MM
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PFC Gross Acreage
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14.1 acres
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$15.37 per Gross Acre
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Benefits for PetroFrontier ("PFC")
- Eliminates the 2013 capital commitment of US$10.0 MM and any further capital requirements until the end of 2016
- Eliminates the need for PetroFrontier to raise additional financing
- Continues to validate PetroFrontier's prospectivity assessment of the Lower Arthur Creek in the Southern Georgina Basin and exploratory work to date
- Secures funding for rapid appraisal and development
- Increases opportunity to fully evaluate and de-risk 14.1 million acres of an immature but potentially highly prospective play at a low cost
- Increased access to procurement services contributes to operational efficiencies
- Positions PetroFrontier for new growth opportunities
Transaction Terms - Amended (June 2013)
Under the terms of the Amended Farmin Agreement, exploration activities will be fully funded by Statoil over 3 phases to the end of 2016, in return for 80% of PetroFrontier's working interest in the Permits.
Phase 1 & 2A (2012 - 2014)
- In 2012 and half of 2013, PetroFrontier and Statoil each spent US$15.0 MM towards ongoing exploration activities
- Statoil will spend the next US$50.0 MM on exploration to include:
385 km 2D seismic
Drilling and stimulation of 4 - 6 vertical test wells
- Statoil assumes operatorship on September 1, 2013
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At the end of Phase 2A or December 31, 2014, Statoil will have the option to continue to Phase 2B; if Statoil elects not to continue, it must return to PetroFrontier 50% of its former WI in the Permits, such that ownership will then be Statoil - 30%, PetroFrontier - 70%
Phase 2B (completed by end of 2015)
- Statoil will spend US$30.0 MM on exploration
- At the end of Phase 2B, Statoil will have the option to continue to Phase 3; if Statoil elects not to continue, then it must return to PetroFrontier 25% of its former WI in the Permits, such that ownership will then be Statoil - 55%, PetroFrontier - 45%
Phase 3 (completed by end of 2016)
- Statoil will spend the next US$80.0 MM on exploration
- At the end of Phase 3, Statoil will have earned 80% WI and PetroFrontier will retain 20%
At the end of Phase 3, Statoil will have completed its funding obligations under the Amended Farmin Agreement and the sharing of future costs between Statoil and PetroFrontier will be based on their then respective ownership interests.
Download a copy of Statoil's June 20, 2012 Joint Venture News Release
Download a copy of Statoil's June 11, 2013 News Release
Statoil and PetroFrontier in the NEWS