WEST PERTH, Australia – Nido Petroleum Ltd. (ASX: NDO) and Otto Energy Ltd. (ASX: OEL) have executed a sale and purchase agreement (SPA) whereby Nido will acquire 100% of the shares in Galoc Production Co. WLL (GPC), the holder of Otto’s 33% working interest in the Galoc oil field, located in service contract 14C1 in the Philippines.
Under the terms of the SPA, Nido will pay Otto $108 million based on the value of GPC as of July 1, 2014. Nido will pay Otto a $10.8 million deposit and will assume all production rights and liabilities associated with Otto’s 33% working interest (including abandonment costs), with effect from July 1, 2014. Completion of the transaction is conditional on Otto shareholder approval.
The Otto board has unanimously recommended Nido’s cash offer, deeming it superior to the existing $101.4 million sale and purchase agreement for GPC entered into with Risco Energy Investments Pte Ltd. on Sept. 22, 2014.
ASX has confirmed that Nido shareholder approval is not required for this transaction pursuant to Listing Rules 11.1.2 and 11.1.3.
If Nido’s offer is successful, the company’s interest in the Galoc oil field will increase to 55.88% and it will assume operatorship of the project.
Risco has waived its right to match the Nido SPA, and the Risco SPA has been terminated. Similar to the terminated Risco transaction, completion of the Nido transaction is conditional on Otto shareholder approval. Otto will issue a Notice of Meeting seeking shareholder approval for the transaction, with a General Meeting to be held in January 2015.