Indago Petroleum Limited announces that RAK Petroleum Oman Limited, a wholly owned subsidiary of RAK Petroleum PCL ("RAK Petroleum"), has acquired Indago's wholly owned subsidiaries holding approximately 50% interests in Blocks 31, 47 and 43A in Oman (the "Licences"). RAK Petroleum already held the balance of the interests and is the Operator of the Licences. As a result of the sale, Indago will have no continuing work obligations in Oman and, following the recently announced settlement of the insurance claim in relation to the Al Jariya 1 well, cash balances of approximately $35 million. This figure is after a payment by Indago to RAK of approximately $3.5 million in relation to a release, subject to certain warranties, from all possible obligations arising from their joint activities and past transactions. Group shareholders' funds, after writing off drilling and development costs, are represented by the cash balances.
David Bremner, CEO of Indago, commented:
"In March 2007 Indago re-focused as a pure oil and gas explorer after the sale of production and certain exploration assets to RAK Petroleum. Subsequently, Indago has participated with RAK Petroleum in two exploration wells, each of which proved impossible to complete as planned, spending around $41 million before insurance recoveries. We understand the wish of our former partner to press ahead with further exploration of these areas. The costs, however, will be very considerable and this agreement assures us of strategic flexibility."
Tim Eggar, Chairman of Indago, commented:
"As indicated in my statement in September 2008, the Board of Indago is continuing to consider and compare opportunities to enhance shareholder value. We are in discussions about a number of interesting corporate and asset transactions, all of which need to be compared to a return of capital. In recent weeks The Board has concluded that the advancement of these opportunities will be greatly facilitated by this transaction which is designed to extinguish any further obligations in Oman. We will make further announcements as these become appropriate."
As a result of the divestment of the Licences, Indago has no remaining oil and gas interests. Under the AIM Rules, Indago has become an Investing Company and must have its investing strategy approved by its shareholders. In addition, in order to remain on AIM, the Company is required under the current AIM Rules to conclude a major transaction within twelve months of such shareholder approval. It has been agreed with the London Stock Exchange that Indago's investing strategy can be approved by shareholders at the Company's next Annual General Meeting.
A circular to be sent to shareholders will set out the Company's investing strategy and the Notice of Annual General Meeting will contain the required resolution seeking approval.