Completion of the divestment of a 10% interest in its Bedout assets next month will provide a major financial boost to Carnarvon Energy Ltd (ASX:CVN) as the company and partner Santos progress the Dorado development toward a final investment decision (FID).
All conditions, including approval by the Foreign Investment Review Board (FIRB), for the divestment to OPIC Australia Pty Limited, a wholly-owned subsidiary of CPC Corporation, Taiwan (CPC), Taiwan’s national oil and gas company, are now satisfied.
Completion of the transaction is expected to occur before the end of August with Carnarvon to receive total cash consideration of US$146 million.
“Substantial financial liquidity”
Carnarvon managing director and CEO Adrian Cook said: “I am extremely pleased to confirm that all the conditions for the CPC transaction, including FIRB approval, have now been satisfied and that completion will occur prior to the end of August.
"Following completion, Carnarvon will hold substantial cash and financial liquidity, enabling it to de-risk funding for the Dorado development in conjunction with prospective debt financing, which has received a strong level of market interest so far.”
Consideration
An upfront payment of US$56 million (~A$80 million) will be received on completion and a further carry of US$90 million (~A$129 million) towards Carnarvon’s share of the Dorado development costs once an FID is taken.
After the upfront payment next month, Carnarvon will hold cash of ~A$178 million with the ~A$129 million contribution towards its share of the Dorado development costs to come.
READ: Carnarvon Energy progresses US$146 million divestment of 10% Bedout interest
“An outstanding result”
"The CPC transaction is an outstanding result for the company, and I would like to thank the Carnarvon team for their hard work in finalising the deal over the past 12 months.
"I look forward to CPC formally joining the joint venture upon completion and working with Carnarvon, and Santos, on progressing the Dorado development to FID as soon as possible.”
Azure Capital acted as Carnarvon’s adviser on the transaction, as well as advising on its ongoing debt financing process for the Dorado development.
READ: Carnarvon Energy advances studies to integrate Pavo oil field into proposed Dorado production facilities