Fletcher Challenge Energy Grows with Petroz
Fletcher Challenge Energy Grows with Petroz Investment
Auckland, 19 July 2000 – Fletcher Challenge Energy has further strengthened its position as a major regional exploration and production company with the signing of an agreement with the Brisbane based Australian listed oil and gas explorer, Petroz N.L.
Under the agreement Fletcher Challenge Energy will be given an option to acquire shares, take a further placement and underwrite a 3:5 rights issue to acquire a minimum 33.7% shareholding in Petroz for an estimated cost of approximately NZ$80 million.
Greig Gailey, Chief Executive, said “This investment represents tangible evidence of our intention to grow. It is entirely consistent with Fletcher Challenge Energy’s stated desire to participate in major regional developments and realises a long held ambition to enter the Australian oil and gas industry.
“The Chairman of the Board of Fletcher Challenge, Dr Roderick Deane, said in May that divisions would continue to be managed for value during the separation process and that this could well include portfolio changes including acquisitions. Whatever the outcome of the separation process, this is a good investment.
“Petroz’s growth profile complements Fletcher Challenge Energy’s current production and strong cash flows, helping to re-balance our portfolio and add new reserves. The investment provides exposure to the world-class Bayu-Undan Liquids Project located in the Timor Sea, which has reserves of 400 million barrels of condensate and LPG and 3.4 TCF of natural gas and is about to enter the development phase.
“We look forward to working with Petroz to bring this project to fruition.”
Petroz N.L. intends to project finance a substantial part of its capital investment in Bayu Undan. Capital contributed by Fletcher Challenge Energy and raised by the subsequent rights issue will provide the appropriate equity base for this third party debt financing.
Rod Brown, Petroz Managing Director said that Petroz was delighted with the agreement and confident it will create value for both companies’ shareholders. “Fletcher Challenge Energy is of strategic importance to Petroz, both in relation to the funding of the Bayu-Undan Liquids Project and in providing the financial strength to realise the Company’s future growth potential.”
Petroz Agreement, P2
The key elements of the proposed transaction are as follows:
Fletcher Challenge Energy has an option
to subscribe for 29,514,890 new ordinary shares in Petroz at
A$0.435 cents per share. This is equivalent to 14.99% of the
current issued capital of the Company.
Subject to the approval of Petroz shareholders and the Foreign Investment Review Board, Fletcher Challenge Energy will subscribe to a further 70,485,110 ordinary shares in the Company at A$0.435 per share, and be required to exercise its option if it has not done so prior to taking up the placement.
Following approval of the placement and exercise of its option, Fletcher Challenge Energy will hold 100,000,000 ordinary shares in Petroz (representing 33.7% of the issued capital). The funds raised by Petroz will be A$43.5 million.
Two Fletcher Challenge nominees shall join the Petroz Board following Petroz shareholder approval of the placement to Fletcher Challenge Energy.
Subject to approval by the Foreign Investment Review Board, Fletcher Challenge Energy will subsequently fully underwrite a 3:5 renounceable rights issue of ordinary shares that will commence immediately after approval of the placement.
The subscription price of new shares under the rights issue will be the lesser of A$0.30 per share, or a 20% discount to the five day ASX weighted average share price following Petroz shareholder approval of the placement.
The rights issue will result in the issue of approximately 178 million new ordinary shares. Depending on the issue price, up to $53.4 million in additional capital will be raised by Petroz under the rights issue.
Apart from shares acquired through the above arrangements, Fletcher Challenge Energy will not acquire any further shares in Petroz for a period of 12 months, unless another party makes a takeover bid or acquires more than 10% of the shares of the Company.
A Notice of Meeting and Explanatory Memorandum will be forward to Petroz Shareholders in mid-August. The shareholders’ meeting to vote on the placement of shares to Fletcher Challenge Energy is scheduled for mid-September 2000.
# # #
Information on the Bayu-Undan project, a map of the field and information on Petroz is attached.
For more information contact:
Fletcher Challenge Energy
Tel: 64 9 525 9230 or 021 629 535
Petroz NL – Company Information
Petroz is an Australian oil and gas, exploration and production company with interests in Australia, the Timor Gap Zone of Cooperation, Indonesia and the United Kingdom. The company was established in 1969, is listed on the Australian Stock Exchange and currently has a market capitalisation of approximately A$75 million.
The Petroz portfolio of petroleum interests includes:
A 15 per cent interest in the ZOCA 91-12 PSC in the Timor Gap Zone of Cooperation. This includes the Elang/Kakatua/Kakatua North Oil Fields which commenced production in July 1998.
A 8.25 per cent interest in the giant Bayu-Undan Gas Condensate Field in the Timor Gap Zone of Cooperation.
Various Australian offshore exploration permits in the Carnarvon Basin, Browse Basin and Bonaparte basin.
A 39 per cent interest in the Bentu and Korinci-Baru PSC’s in Sumatra, Indonesia.
Over the past six years, the company had participated in the drilling of 30 exploration wells which added 94.5 million barrels of oil equivalent to the company’s proved and probable reserves.
In March 1999, a A$45 million credit facility was entered into with the Commonwealth Bank of Australia. The objective of the facility is to provide Petroz with maximum flexibility in relation to the funding of its development projects.
Bayu-Undan Project – Information
A world-class gas and condensate field in the Timor Gap Zone of Cooperation.
Reserves – 400 million barrels liquids (condensate &
3.4 TCF of natural gas.
Contracts totaling US$378 million have been awarded, with the remaining contracts for the production facilities totaling some US$225 million to be awarded by mid-August this year. The only outstanding major contracts are for development drilling, which will be awarded during the first half of 2001.
Liquids Project approved by the Joint Authority on 23 February 2000.
Project Operator Phillips Petroleum (50.3 per cent interest) is currently finalising detailed engineering design work. The development consists of three platforms and a floating storage and offloading vessel (FSO) with an approximate cost of US$1.4 billion.
The development schedule:
Fabrication of platforms and FSO commences 1st half 2001
Installation of platform jacket commences 1st quarter 2002
Development drilling commences 2nd quarter 2002
First Production and live commissioning commences 4th quarter 2003
Full-scale production commences 1st quarter 2004
Production rate 113,000 barrels of liquids per day.
Project life 20 years or more with gas sales.
Sixty per cent of the Bayu-Undan petroleum resource is natural gas. Phillips is actively pursuing domestic and export gas markets with the aim of achieving gas production coincident with liquids production. Project profitability increases significantly once gas sales are established.
Phillips is in the final stage of an exclusive negotiation with Multiplex Construction for the building of a 500km gas pipeline across the Timor Sea from Bayu-Undan to Darwin, Australia.
Philips formed an alliance in 1999 with EPIC Energy to market Bayu-Undan gas to the Northern Territory and the southern states. EPIC commences the pipeline route survey from Darwin to Mt. Isa and Moomba in August this year.
Phillips is also pursuing the sale of Bayu-Undan gas as LNG to Asian markets.