TAG Oil has entered into a definitive purchase and sale agreement dated October 14, 2020, with Australian-based Luco Energy Pty. Ltd. ('Luco'), a company owned by Ilwella Pty. Ltd. and AJ Lucas Services, to divest its Australian assets and operations as part of a strategic realignment of the Company's oil and gas exploration and development activities.
This is an arm's length transaction that involves the sale by TAG Oil of the shares of its Australian subsidiary, Cypress Petroleum Pty Ltd., which holds the Company's 100% working interests in PL 17, ATP 2037, and ATP 2038 (collectively, the 'Permits') located in the Surat Basin of Queensland, Australia to Luco (the 'Transaction'). Formal closing of the Transaction is expected in calendar Q4 2020, subject to satisfaction of certain customary conditions precedent, including approval of the TSX Venture Exchange.
- Cash payment to TAG Oil of A$2,500,000 at closing.
- TAG Oil to receive a 3.0% gross overriding royalty on future production from all liquids produced from the Permits.
- The Transaction will be funded from Luco's available financial resources.
Abby Badwi, Executive Chairman of TAG Oil said,
"The sale of TAG Oil's Australian assets and operations to the Ilwella group enables the Company to strengthen its balance sheet while still maintaining exposure to potential future upside from the prospective permits through the royalty. The Company is continuing to assess various oil and gas acquisition opportunities of assets and/or companies in the initial focus area of the Middle East and North Africa that will provide value to shareholders."
KeyFacts Energy: TAG Oil Australia country profile