Updating Acquisition of Cove's Interest in Mnazi Bay

Source: www.gulfoilandgas.com 4/26/2012, Location: Africa

Further to Wentworth's recent 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 Concession and M&P's pre-emption rights, Wentworth is pleased to provide the following update:

* As previously announced, 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, and
- Cove Energy also receiving a contingent payments of up to US$8.5 million, should certain future natural gas production thresholds from Mnazi Bay be reached.

* The purchase of CETMBL by Wentworth has been approved by the Government of Tanzania

* Wentworth has now 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, and
- M&P assuming 60.075% of the contingent payments due to Cove Energy.

* M&P and Wentworth have agreed that upon completion of this transaction their respective pre-emption rights under the Joint Operating Agreement will be fully statisfied,

* From the Effective Date, M&P's and Wentworth's share of revenue, operating costs, exploration costs and development costs are as set out in the table below, with the exception of M&P paying 88.02% of the costs of the Ziwani-1 exploration well and 88.02% of the next US$8.8 million of capital expenditures.

The sale of 60.075% of the shares of CETMBL to M&P is subject to government approval. Assuming receipt of this remaining government approval the effective interests will be as follows: M&P (operator) has a 48.06% interest in development and production and a 60.075% interest in exploration. Wentworth has a 31.94% interest in development and production and a 39.925% interest in exploration. TPDC has a 20.00 % interest in development and production.

Executive Chairman, Bob McBean , commented:

"We are extremely pleased to provide this update to shareholders and look forward to completing these transactions upon receipt of government approval. 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 will soon commence and the partners are planning exploration activities following the completion of the workovers. These activities are designed to increase our resource base and position Wentworth to become a significant gas producer in Tanzania."


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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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