Australia’s FIRB clears Armour Energy's farm-out of stakes to AEP for $130M

Armour Energy Ltd. reported Wednesday that American Energy Partners LLP (AEP) has received approval from Australia's Foreign Investment Review Board (FIRB) for AEP’s proposal to acquire a 75%  interest in Armour’s McArthur Basin oil and gas project in the Northern Territory and up to a 15.95% interest in Armour Energy. The proposal relates to AEP’s investment of up to $130 million (AUD 185 million) over a five-year period in return for the 75% interest in the project.

The FIRB approval received to date is a further step towards closing of the agreements with AEP on the project. Closing can take place at any time up to Jan. 9, 2016, at which point AEP will pay Armour $13 million (AUD 18.43 million).

Under related agreements, AEP will also subscribe a further $2.74 million (AUD 3.75 million) for Armour shares at $0.1462 (AUD 0.20) per share on the closing of the farm-in agreements, adding to AEP’s existing 5% investment in Armour at an initial price of $2.74 million (AUD 3.75 million), completed Nov. 4, giving AEP a combined 10% interest in the company. At that stage, AEP will also be entitled to 24 million options to subscribe for further shares in Armour. The allotment of these options has also received FIRB approval.

Under the proportional bid to be made by AEP for 13.62% of Armour at $0.1826 (AUD 0.25) per share, AEP will be entitled subject to the level of acceptances received to gain up to a 20% shareholding interest in the company. AEP will then nominate a non-executive director to the board of Armour.


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