"Ambassador said its deal with New Standard on PEL 570 imputed a value 27c a share compared with its market price yesterday of 17c a share."
US shale specialist in three-way deal
BARRY FITZGERALD THE AUSTRALIAN DECEMBER 11, 2013 12:00AM Print
THE entry of US shale specialist Magnum Hunter to the Australian oil and gas scene through a three-way tie-up with Australian Securities Exchange-listed New Standard Energy and Ambassador Oil and Gas has been confirmed.
Under a deal foreshadowed by The Australian, the New York-listed Magnum Hunter is to become a cornerstone investor in New Standard through the sale of shale oil-producing assets in Texas, while New Standard is to pick up the running on Ambassador's PEL 570 unconventional oil and gas permit in the Cooper Basin under a $42.5 million farm-in deal.
Magnum Hunter will emerge with an initial 17 per cent in New Standard and will receive $US15m ($16.5m) cash from the company in return for the sale of shale oil acreage in Texas, which is home to five production wells producing about 300-400 barrels of oil equivalent a day. The acquisition will deliver New Standard -- previously limited to unconventional oil and gas exploration in Western Australia -- its first monthly cashflow. But it needs to secure a $US15m-$US20m term loan and revolving credit facility towards the acquisition and future well costs.
New Standard managing director Phil Thick said the deal meant the company retained significant frontier exploration exposure while adding cashflow from a US shale oil business that had significant low-cost growth opportunities, as well as the exposure to eastern states domestic and export gas markets, assuming exploration success in PEL 570.
Ambassador said its deal with New Standard on PEL 570 imputed a value 27c a share compared with its market price yesterday of 17c a share. It also brings one of the US shale industry pioneers in Magnum Hunter into the Cooper Basin. New Standard can earn a 52.5 per cent interest in PEL 570.
The deal replaces an earlier agreement Ambassador had with Outback Energy Hunter, announced in August. OEH is being acquired by New Standard as part of the broader deal. It is owned by private oil and gas company Pathfinder Energy, which has former Nexus Energy boss Michael Fowler as its executive chairman.
Pathfinder receives $5.6m and an initial 3.9 per cent stake in New Standard as part of the overall deal.
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