Highlights

• Unlocking unrecognized value for shareholders through proposed demerger and separate ASX listing of Armour’s Northern Basin Oil & Gas Business.
• McArthur Oil & Gas Ltd – a new company – is proposed to be created to hold the Northern Basin Oil & Gas Business and demerged from Armour through an in-specie share distribution to existing shareholders.
• IPO and capital raise of $60-$65 million for McArthur Oil & Gas proposed to fund acquisition of Northern Basin Oil & Gas assets from Armour and to fund forward exploration.  
• Proposed total consideration of $40 million cash plus a minimum of 33.3% retained interest by Armour shareholders in McArthur Oil & Gas. The consideration received by Armour will be used to retire its outstanding debt.
• As part of the IPO and, subject to Armour shareholder approval, Armour intends to distribute on a tax-effective in-specie basis shares in McArthur Oil & Gas of a minimum of 33.3% by a return of capital to existing shareholders of Armour and will provide shareholders with a direct interest in two separately listed companies.  
• Armour shareholders expected to also be provided a priority entitlement to participate in the IPO of McArthur Oil & Gas.
• McArthur Oil & Gas proposed to be the dominant exploration license holder in McArthur Basin with 13 permits covering ~89,000 km² and major holding in South Nicholson Basin with 1 permit covering ~7,900 km².
• McArthur Basin has proven conventional and unconventional shale gas resources with a focus on near term production development opportunities from existing conventional discoveries.
• Independently certified Prospective Resources of 34 TCF (Best Estimate) of conventional and unconventional gas and 1.2 billion barrels of oil and hydrocarbon liquids (Best Estimate).
• 193 conventional leads and prospects identified in Coxco and Reward Dolomites and Tawallah Group Sandstones with 4.3 TCF Prospective Resources (Best Estimate).
• Proposed separation will also provide greater flexibility to pursue further project opportunities.
• Further information on the McArthur Oil & Gas IPO including the record date for determining entitlements to the distribution of shares in McArthur Oil & Gas will be provided in the coming weeks.  

Armour Energy proposes to demerge the Northern Basin Oil & Gas Business into a newly formed company – McArthur Oil & Gas Ltd – to be separately listed on ASX to unlock unrecognized value for shareholders.  

The Northern Basin Business – Leading Operator in the McArthur Basin

Armour is the leading operator in the McArthur Basin and is the 100% owner and operator of six granted Exploration Permits and seven Exploration Permit applications covering approximately 89,000 km² in the Northern Territory and the 100% owner and operator of a material position in the South Nicholson Basin in NW Queensland with one Exploration Permit application in the South Nicholson Basin covering approximately 7,900 km².

Armour’s McArthur Basin exploration project area represents the largest and most important part of the Northern, Central and Southern McArthur Basin where the thickest and most oil and gas prone sections of the McArthur and Tawallah Groups are present.

Northern Basin Business Summary

• 100% owner and operator of 14 permits covering ~96,900 km²
• Proven conventional & unconventional gas play fairways
• 193 conventional leads/prospects identified in Coxco, Reward & Tawallah formations
• Conventional Prospective Resources P50 (Best Estimate) = 4.4 TCF (Net)
• Unconventional Prospective Resources P50 (Best Estimate) = 30 TCF (Net)
• Multiple conventional gas discoveries with 6 BCF 2C Contingent Resources
• Retention License (RL) Applications made covering conventional gas discoveries
• RLs important first step towards securing production licenses for existing gas discoveries
• Gas sale discussions underway targeting gas sales from late 2022 onwards

Armour Energy’s CEO, Brad Lingo said:
“The proposed demerger of the Northern Basin Business exploration and the development of the existing gas discoveries through McArthur Oil & Gas is a great opportunity to unlock significant value for shareholders. The Company has been well aware that the value of the Northern Basin Business has not been reflected in the Company’s share price and market capitalisation as it competes with the demands of the Company’s Surat Basin operations and the Company’s financial position. It is absolutely incumbent on the Company to unlock this value for shareholders and there are clear markers on value presented by the other pure-play McArthur/Beetaloo Basin focussed companies.”

Mr. Lingo continued: 
“Through the proposed demerger the Company is simultaneously delivering two value creating outcomes for shareholders – unlocking the value of the Northern Basin Business and delivering this directly to shareholders dealing and removing the debt burden on the Company so it can focus on delivering the operational performance from the Surat Basin and building on the untapped exploration potential of both the Cooper and Surat Basins.”

KeyFacts Energy: Armour Energy Australia country profile