The company, which operates in the Tomsk Oblast, Russia, said the heads of terms had been signed with Belgrave Naftogas, formerly Arawak Energy Russia, in relation to Licence 67.
David Sturt, CEO of PetroNeft Resources, said the deal was consistent with the board and management’s previously announced commitment of enhancing shareholder value through boosting production, reserves and revenue.
- As early as next month the asset is expected to transform from being an exploration to a producing asset
- This agreement will add significant impetus to our plans to develop the licence
- The significant premium on the share converts reflects both PetroNeft Resources and Belgrave Naftogas’s shared view of the mismatch between the current share price of PetroNeft and the intrinsic value of PetroNeft’s underlying asset portfolio
- We expect that Belgrave Naftogas’s nominated director will combine international experience and regional insight to boost the financial and operating profile of our assets
- We will be working hard with Belgrave Naftogas to ensure that we close the acquisition during the 1st quarter 2021
The payment will be made through the issuance of 80 million PetroNeft ordinary shares to Belgrave Naftogas (representing an 8.7 % shareholding) for a value of $1.2 million.
There will also be a cash consideration of $1.7 million which will be financed through a 3 year loan from Belgrave Naftogas to PetroNeft with an interest rate of 8 % above Bank of England base rate.
Belgrave Naftogas will also have the right to nominate a director onto the PetroNeft Board.