Kulczyk Oil Ventures Inc announces that KOV and its major shareholder Kulczyk Investments S.A. ("KI") have mutually agreed that it was not in the best interest of either company to continue the option beyond its 31 March 2012 expiry date.
KOV announced on 6 May 2011 that it had joined the Neconde Energy Limited ("Neconde") consortium and that Neconde had entered into an agreement with Shell Petroleum Development Company of Nigeria Ltd ("SPDC") and certain of its partners in Oil Mining License 42 ("OML 42") pursuant to which Neconde would acquire a 45% participating interest in OML 42. OML 42 is a large block containing previously discovered oil fields in the Niger Delta area of Nigeria. The interest of KOV in the Neconde consortium was 20% subject to a bridge financing arrangement with KI.
On 1 December 2011, KOV announced that the purchase of OML 42 by Neconde was completed for a purchase price, subject to closing adjustments, of $585 million. Of this amount, $435 million was paid by consortium partners as equity contributions to Neconde with KI paying for the potential share of KOV pursuant to the bridge financing arrangement. The remaining $150 million of the total purchase price was funded through Neconde debt financing. Under the terms of the bridge financing arrangement with KI, KOV had until 31 March 2012 to repay KI for its bridge financing, after which date the shares of KOV in Neconde would be transferred to KI.
Tim Elliott, President and Chief Executive Officer of KOV commented:
"OML 42 is a world-class oil property with substantial opportunity for growth in production and reserves. KOV is committed to the growth of the business but following considered due diligence and with our shareholders value at the front of our minds the executive team have decided that to exercise our option would be too dilutive to existing shareholders at current market price. I would like to take this opportunity to thank our major shareholder KI for their support throughout this project."
