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EMGS and North Energy Sign $16.1m Agreement

Source: www.gulfoilandgas.com 1/21/2014, Location: Europe

Electromagnetic Geoservices ASA (EMGS) has signed an agreement with North Energy ASA (North Energy) worth NOK 100 million (USD 16.1 million).

The agreement includes a sale of 3D EM data from EMGS's existing multi-client data library in the Barents Sea for USD 12.1 million and a sale of services related to EM inversion and integrated interpretation for USD 2.4 million. In addition, North Energy has committed to a pre-funding of USD 1.6 million for a 2014 Barents Sea program.

The payment for the 3D EM data will be in the form of a convertible bond issued by North Energy with a strike price of NOK 4.15, coupon of 6% and a maturity of six months. At maturity, if not converted before, EMGS will receive NOK 75 million (USD 12.1 million) plus interest. The remaining part of the payment of NOK 25 million (USD 4.1 million) will be settled in cash.

Strategic partnership
"This multi-client sale confirms the substantial value in our 3D EM library in the Barents Sea. We are also encouraged by the fact that we are now entering into a strategic partnership with North Energy where the application of EM technology will be an integral part of their exploration workflow," said CEO of EMGS, Roar Bekker.

EMGS will participate with NOK 20 million (approximately USD 3.2 million) in a private placement totaling NOK 285 million, in North Energy.

"This investment strengthens our partnership with a key customer and enables us to further harvest on our technology by participating in the value creation from integration of EM in the exploration workflow. We are also pleased to note that the completion of North Energy's private placement renders them fully financed for a substantial exploration program," said Bekker.

The agreement is subject to approval by the Extraordinary General Meeting (EGM) in North Energy scheduled for 13 February.

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