Niko Resources (TSX: NKO, Stock Forum) shored up its bottom line when the company announced today that it had entered into a definitive agreement with a subsidiary of Ophir Energy (GREY: OPHRY, Stock Forum) for the sale of Niko's interests in seven Indonesian production sharing contracts (“PSCs”) for a cash consideration of $31.0 million, with further payments of up to $56.0 million based on future exploration success.
According to the news release, transaction closures on each of the aforementioned interest sales remain subject to closing adjustments and various conditions including approval from the Government of Indonesia, certain third party consents and agreements as well as other conditions customary to transactions of this type.
Proceeds from the transactions will be directed toward the reduction of the company's outstanding contract settlement obligation to Diamond Offshore (NYSE: DO, Stock Forum), with the remainder subject to conditions outlined in the company's term loan facilities agreement.
Company Chairman and Interim CEO, Kevin J. Clarke, commented on the transactions, “The sale of these PSCs aligns with our strategy to strengthening our balance sheet, while maintaining exposure to future potential exploration success.”
Then he summed up, “Our team will continue to focus on developing innovative solutions that include farm-outs or sales of selected assets in our portfolio to further improve our balance sheet and increase our operating flexibility.”
Niko Resources was in the news recently when the Calgary-based company announced the Government of India's revisions of domestic gas prices a week ago.
Shares climbed 12.50% on the news to $0.36 per share.
Currently there are 94.0m outstanding shares with a market cap of $33.8 million.