Further to Wentworth's announcements regarding the proposed acquisition of Cove Energy plc's 16.38% participation interest in the production operations (20.475% participation interest in exploration operations) in the Mnazi Bay Concessio and Maurel et Prom's (M&P) pre-emption rights, Wentworth is pleased to announce that all of the necessary Government approvals have been received. The following is a summary of the transactions:
* Wentworth has entered into an agreement to purchase Cove Energy's participating interest in the Concession with an effective date of September 30, 2011, which is held by Cove Energy's 100% owned subsidiary Cove Energy Tanzania Mnazi Bay Limited (CETMBL), in exchange for:
- Terminating its 4.95% royalty interest out of net profits from Cove Energy's 8.5% working intertest in the Offshore Rovuma Area 1 Concession in Mozambique;
- Two million newly issued fully paid shares in Wentworth;
- Cove Energy will also receive a contingent payment of up to US$8.5 million, should certain future natural gas production thresholds from Mnazi Bay be reached.
* Wentworth has entered into an agreement to sell 60.075% of the shares of CETMBL to M&P for:
- Cash consideration of approximately US$ 18.9 million to be paid to Wentworth upon closing;
- M&P assuming 60.075% of the contingent payment due to Cove Energy.
* The purchase of CETMBL by Wentworth and M&P's purchase of pro rata shares of CETMBL have been approved by the Government of Tanzania.
* Wentworth and M&P have agreed that upon completion of the transactions their respective pre-emption rights under the Joint Operating Agreement will be fully statisfied.
* Wentworth shall issue an update to its trading exchanges upon closing the transactions, which is expected later this month.
From the Effective Date, M&P's and Wentworth's share of revenue, operating costs, exploration costs and development costs are as set out below, with the exception of Wentworth paying 11.98% of the costs of the Ziwani-1 exploration well and 11.98% of the next US$8.8 million of capital expenditures. Upon closing the transactions the respective interests will be as follows:
M&P (operator) has 48.06% in Development & Production and 60.07% Interest in Exploration; Wentworth has 31.94% in Development & Production and 39.925% Interest in Exploration; and TPDC has 20.00% in Development & Production.
Executive Chairman, Bob McBean, commented:
"We are extremely pleased to provide this update to shareholders and to receive final government approval to close these important transactions. We continue to work with our partners, M&P and TPDC, to further the exploration and development of the Mnazi Bay Concession. In anticipation of completion of the Mtwara to Dar es Salaam pipeline, negotiations of a gas sales agreement are underway, workovers of three existing gas wells are ongoing and the partners are planning additional exploration activities. These activities are designed to increase our resource base and position Wentworth to become a significant gas producer in Tanzania."