KUALA LUMPUR (Feb 12): Special purpose acquisition company (SPAC) Sona Petroleum Bhd is further negotiating on the value of its proposed acquisition of Australia’s stag oilfield, after independent valuers deemed the transaction unfairly priced.
In a filing with Bursa Malaysia, Sona Petroleum said it has received conditional approval from the Securities Commission of Malaysia (SC) of the acquisition today, but said the SC had noted that according to independent technical and asset valuation expert Gaffney, Cline and Associates (Consultants) Pte Ltd in a valuation report dated Jan 20 this year, the purchase price was considered “not fair”, as it was above fair market value of the oilfield in question.
“However, in this regard, the company is currently in negotiations with the sellers of the Stag oilfield to reduce the purchase consideration for the proposed acquisition,” the filing stated.
Sona Petroleum said SC’s approval is subject to several conditions. Among them is that Sona Petroleum is expected to utilise up to 80% of the amount in its trust account for the acquisition of the Stag oilfield and to finance part of the infill development.
Sona Petroleum said the funds to be utilised for the infill development will be placed in another trust account, with a proper approval process in place for the monitoring and disbursement of funds.
Sona Petroleum will also issue monthly and quarterly updates through announcements on Bursa Malaysia on the amount of cash drawn down and balance in the trust account, the filing stated.
The company also has to appoint an additional independent non-executive director who has the appropriate qualification and experience to effectively discharge the role of an independent director of a listed company, prior to the issuance of the circular to shareholders.
On Nov 2, Sona Petroleum had announced it is planning to buy Australia’s Stag oilfield for US$50 million from Quadrant Northwest Pty Ltd and Santos Offshore Pty Ltd for US$50 million (RM208 million), and the transaction is also intended to be the SPAC’s qualifying acquisition (QA).
The oilfield is located at the Carnarvon Basin, offshore Western Australia.
The agreement entails Sona Australia acquiring 100% interest in the production license WA-15-L and pipeline license WA-6-PL and the associated assets, which are collectively known as the Stag Oilfield, along with the operatorship of the oilfield.
The agreement is expected to be completed by March 31, 2016, following which Sona Petroleum is expected to have access to 13 million stock tank barrels (MMstb) of proved (1P) oil reserves, 16.2 MMstb of proved plus probable (2P) oil reserves and 24.0 MMstb of proved plus probable plus possible (3P) oil reserves.
It was reported the acquisition’s price tag was questioned, following a Wood Mackenzie report suggesting Santos’ stake in the field was only worth US$13 million (RM54.13 million), placing the oilfield’s worth at about US$19.5 million (RM81.2 million) on the assumption that Quadrant’s is worth about US$6.5 million (RM27.07 million).
Santos holds a majority stake of 66.7% in the producing oil field, while Quadrant holds a 33.3% stake.
The acquisition had received approval from the Australian Foreign Investment Review Board on Nov 27, 2015.
Sona Petroleum shares closed unchanged at 45 sen today, for a market capitalisation of RM1.41 billion.