Molopo Energy Limited (Molopo) is pleased to announce that it has entered into an agreement for the sale of its Queensland Bowen Basin coal bed methane assets to a wholly-owned subsidiary of PetroChina International Investment Company Limited for A$41 million plus a A$2.4 million adjustment for working capital. The transaction is subject to review by the Australian Foreign Investment Review Board (“FIRB”) and the purchaser obtaining approval from the Chinese National Development Reform Commission (“NDRC”) which must be obtained within sixty days unless otherwise extended. Settlement of the transaction is expected to occur thirty days after the later of the FIRB and NDRC conditions being satisfied.
CEO Tim Granger commented, “We’re pleased to have reached agreement for this sale, which is an important step in our previously stated strategy of focussing on our unconventional North American oil assets. The sale proceeds, combined with our existing strong cash position, will be used to fund our 2013 capital program as we enter a period of intensive development of our Texas Wolfcamp oil acreage.
“We have conducted a very thorough sales process for these coal bed methane assets and are confident that this transaction is the optimal outcome for shareholders.”
As the anticipated sale proceeds are less than carrying value of the Queensland asset and the disposal costs, Molopo expects to recognise a before tax impairment to its June 30, 2012 accounts of approximately $24 million. No cash tax is anticipated as this transaction will be offset against accumulated tax losses.
1Molopo, through its wholly-owned subsidiaries Lowell Petroleum NL, Molopo Generation Pty Ltd and Molopo Queensland LLC, is the majority owner and operator for Authorities to Prospect permits covering 1,370 km over five project areas in the Bowen Basin, west of Gladstone, Queensland.