15th Feb 2005 07:00
Burren Energy PLC15 February 2005 15 February 2005 Burren Energy plc Hindustan Oil Exploration Co.- Acquisition of Equity Interest Burren today announces the acquisition of a 26.0% equity interest in HindustanOil Exploration Company ("HOEC") for a consideration of US$26.0 million,together with options and an open offer to all shareholders of HOEC to acquireadditional shares in HOEC to enable Burren to acquire up to a 51% equityinterest in HOEC. This transaction marks Burren's first corporate acquisitionsince its flotation in December 2003. About HOEC HOEC is India's only publicly quoted oil & gas exploration and productioncompany outside the state controlled sector, with a market capitalisation as at14 February 2005 of US$138 million. HOEC is based in Vadodara, Gujarat and itsshares are quoted on the National Stock Exchange of India and the Bombay StockExchange. HOEC has a portfolio of onshore and offshore assets in India, as follows: (i) Cauvery : offshore south east coast, Tamil Nadu • A 100%* operating interest in the PY-1 block, the gas development planfor which has been approved by the Government of India with the aim of producingfirst gas by the end of 2006, and for which a gas sales agreement is undernegotiation. • A 21% non-operating interest in the PY-3 block, which producesapproximately 6,800 bopd and is operated by Hardy Exploration & Production(India) Inc • An 80%* operating interest in the CY-OSN-97/1 exploration block (ii) Cambay : onshore / offshore Gujarat • Operated interests of between 25% and 50% in three small onshore oiland gas fields, of which one is producing • 57%* interest in CB-OS/1 offshore exploration block, for which Oil &Natural Gas Corporation (ONGC) is operator (iii) Assam : onshore • 25% non-operating interest in block AAP-ON-94/1 for which Premier Oilis operator and where a first exploration well is due to spud shortly * These percentages reflect recent increases in HOEC's equity interest which arestill subject to Government approval. In the year ended 31 March 2004, HOEC made a profit before tax of 215.3m Rupees(US$ 4.9m) on turnover of 496.5m Rupees (US$ 11.3m). At 31 March 2004, HOEC hadnet assets of 1,985.9m Rupees (US$ 45.4m). In its annual report for the year ended 31 March 2004, HOEC published provenreserves data, limited to the PY-3 field, of 6.45 MMBO. Burren intends to reviewPY-3 and HOEC's other assets as quickly as possible with a view to includingupdated reserves information in Burren's statement of group reserves which isexpected to be made at or around the time of its preliminary results for theyear ended 31 December 2004. The Transaction On 14 February 2005 Burren entered into a share purchase agreement with asubsidiary of Unocal Corporation to acquire Unocal Bharat Limited which holds a26% stake in HOEC. Also on 14 February 2005, Burren, through Unocal Bharat Limited, entered intothe following conditional agreements to acquire further shares in HOEC: (i) an agreement with Infrastructure Leasing and Financial Services Corporation("ILFSC") to acquire up to a 4.3% stake in HOEC. The agreement with ILFSC isconditional on regulatory approval and completion of the Open Offer referred tobelow and is expected to be completed by 14 August 2005; and (ii) an agreement with Housing Development Finance Corporation ("HDFC") toacquire, at Burren's option, all or part of HDFC's 10.7% stake in HOEC. Thisoption, which is subject to regulatory approval, is only capable of beingexercised to the extent that Burren's aggregate shareholding in HOEC is,following completion of the agreements referred to above and the Open Offerreferred to below, less than 51%. The total cost of acquiring all the shares in HOEC included in the agreementsdescribed above (the "Initial Purchases") is approximately US$41.4m. The HOEC shares which are to be acquired from ILFSC and HDFC pursuant to theInitial Purchases are subject to an existing Shareholders Agreement betweenHOEC, Unocal Bharat Limited, HDFC, ILFSC and Hardy Oil & Gas (UK) Ltd.("Hardy"), which owns 8.5% of HOEC. Burren understands that Hardy may be able toexercise pre-emption rights contained in the Shareholders Agreement. Were Hardyto do so, the maximum amount of shares in HOEC which Burren would own as aresult of the Initial Purchases would be reduced to approximately 37%, comparedwith 41% were Hardy not to exercise those rights. As a consequence of the Initial Purchases, under the rules of the Securities &Exchange Board of India ("SEBI"), Burren is obligated to make an open offer incash (the "Open Offer") to acquire not less than 20% of the outstanding sharecapital of HOEC at not less than a minimum offer price specified by SEBI basedon the higher of (a) the average daily high and low prices for the 2 week periodending on the day before the Initial Purchases and (b) the average of the weeklyhigh and low prices for the 26 week period ending on the day before the InitialPurchases (the "Minimum Offer Price"). An Open Offer for 20% of the outstanding share capital of HOEC has thereforetoday been announced at the Minimum Offer Price. The Open Offer is not subjectto any minimum level of acceptances. Burren expects that, if the Open Offer istaken up in full, the total consideration payable by Burren for the 20% stake inHOEC would be approximately US$25m. The Open Offer will close on 27 April 2005. Finian O'Sullivan and Atul Gupta have as of 14 February 2005 been appointed tothe Board of HOEC, which now consists of 6 directors, and have become members ofHOEC's executive committee. Strategy and Rationale Burren considers that HOEC represents an attractive opportunity to enter theIndian oil & gas industry via the acquisition of a significant interest in animportant domestic oil and gas producing company. Furthermore Burren believes that India represents a significant opportunity foroil & gas exploration and development taking into account the expected growth inIndia's energy requirements and the Indian Government's current efforts toattract the participation of non-state entities in the energy business. Burrenintends to pursue Indian growth opportunities with a view to establishing Indiaas the fourth leg of its business, complementing its existing interests in theCaspian, West Africa and North Africa. Financing Financing for the Initial Purchases and the Open Offer will come from Burren'sexisting cash resources and undrawn debt facilities. In order to complete the development of the PY-1 gas field HOEC is likely tohave a requirement for additional capital within the next 12 months and Burrenintends to contribute to HOEC's capital needs. Burren is in the process ofarranging a new US$100 million loan facility, to be underwritten by NatexisBanques Populaires, to finance its general group expenditure. Commenting on the announcement Finian O'Sullivan, Chief Executive of Burrensaid: "This investment in HOEC is very compelling for Burren. HOEC's existing cashflow will fund its ongoing activities in the producing and exploration interestsin the Assam, Cambay and Cauvery Basins in 2005. The development of the PY-1 gasfield offers significant potential that should generate strong cash flow growthfrom 2007." Enquiries: Burren Energy plc Tel: 020 7484 1900Finian O'Sullivan, Chief Executive OfficerAtul Gupta, Chief Operating OfficerAndrew Rose, Chief Financial Officer Gavin Anderson & Company Tel: 020 7554 1400Deborah Walter / Charlotte Stone Notes to Editors Burren Energy is an independent oil and gas exploration and production group,headquartered in London. It is focused on two principal regions: the Caspianregion of the former Soviet Union and West Africa, with recently addedexploration acreage in Egypt. The company is listed on the London Stock Exchange("BUR"). Burren's total proven & probable oil reserves as announced on 5 April 2004 were133 Mmbbls, (net to the Group on an entitlement basis). An independentrevaluation of reserves will be undertaken and announced at end of the currentfinancial year. In the Caspian region of Turkmenistan, Burren has a 100 percent. working interest in the Nebit Dag PSA, which contains the Burun oil andgas field with net proven and probable oil reserves at 5 April 2004 of 95Mmbbls. In the Republic of Congo (Brazzaville), Burren has working interests inthe M'Boundi, Kouakouala and Pointe Indienne fields with aggregate net provenand probable oil reserves at 5 April 2004 of 38 Mmbbls, of which 36 millionbarrels were in M'Boundi. Significant exploration and development programmes areunderway in Turkmenistan and the Congo. Note: An exchange rate of US$1 : 43.6 Rupees has been applied in calculating thecomparative financial date above. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Burford Capital