31st Jan 2020 11:54
(Alliance News) - Coro Energy PLC on Friday said it has terminated the planned acquisition of 42.5% interest in the Bulu production sharing contract, offshore Java in Indonesia.
The oil and gas exploration company said the purchase will no longer proceed as it has decided to pursue a growth strategy that would see it acquiring material, low-risk assets with significant upside.
On December 3, Coro said it was seeking a six-month extension to the long-stop date on the Bulu acquisition. The acquisition was conditional upon a joint venture partner pre-emption waiver and regulatory government approvals being obtained by December 2. While the waiver was received, government approvals were delayed and the acquisition did not complete in time, resulting in Coro seeking an extension.
However, the company has now stated that with the government approvals still outstanding and there being concerns round the future of the operating partner, potential changes to the composition of the Bulu partnership group, and the possibility of new requirements being introduced in satisfying the plan of development at Bulu, it believes that the risks associated with the acquisition has significantly increased.
The acquisition was to be satisfied with a total of USD6.9 million, together with an additional USD1.0 million in working capital adjustments to AWE Ltd. Additionally, Coro would have paid USD4 million by way of the issue of new Coro ordinary shares to Hyoil (Bulu) Pte Ltd.
As the acquisition has now been terminated, the payments will not be made. Overall, Coro said its net expenditure relating to the transaction has amounted to around USD250,000.
"As we look to build our portfolio, we recognise the importance of being highly selective in identifying the right projects to pursue whilst also managing our funds in the best interests of shareholders. The increased risks around the Bulu project have led us to terminate the transaction, allowing us, with 2020 shaping up to be a highly active M&A market in the region, to focus our resources on opportunities that can provide near-term impact on the company," said Coro Chief Executive James Menzies.
The stock was trading 4.8% higher at 1.65 pence each on Friday morning in London.
By Ife Taiwo; [email protected]
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