Deals

Andes Energia plc Acquires producing and exploration assets in Argentina

Posted: 11th March 2013 08:36
The Board of Andes (AIM: AEN; BCBA: AEN) is pleased to announce the successful completion of the acquisition of 100% of the issued share capital of Kilwer S.A. ("Kilwer"), a private oil and gas company with producing and exploration assets in Argentina, from local, South American investors.
KILWER PORTFOLIO HIGHLIGHTS
 
  • 1.2 million of net 2P reserves, 39 million bbl of net contingent resources, 60 million bbl of net recoverable shale oil resources, and 1.9 million of net acreage.
  • 6.75% working interest in 2 development blocks Neuquen
  • 10% carried interest in 3 exploration blocks and a 5% carried interest in 4 exploration blocks in Mendoza
  • 40% working interest in 1 exploration block and a 15% working interest in 2 exploration blocks in Salta
  • 2% carried interest in 6 exploration blocks and a 20% working interest in 1 exploration block in Chubut
  • 2% working interest in 1 exploration block in Rio Negro
 
This transaction is a significant step in Andes's path to become a large operating company in terms of reserves and production  and consolidates Andes as the fourth largest holder of E&P acreage in Argentina (4,590,565 acres, equivalent in size to 90% of Wales), with interests in blocks in prolific hydrocarbon basins, including; Neuquen; Golfo San Jorge; Northwest; and Nirihuau.
 
The combination of Kilwer's and Andes's assets is strategically very valuable; providing a participation in ten new licences; increasing the Group's participation interest in ten licences; giving Andes operator status in others; and bringing additional production, via the Kilwer's interest in Chachahuen, an asset in its early development stage, which also has unconventional potential in the Vaca Muerta formation. This development field increases Andes's annual production by 30%. Andes attributes a premium value to this asset due to the technical and operational advantages that exist and the fact that under a JV agreement with YPF S.A, Andes is carried through the exploration and early development phase, making it a net cash generating business unit. Following the acquisition, Andes is now the operator on 13 licences.
 
Acquisition Terms
 
The interests in the above licences have been acquired through the acquisition of 100% of the issued share capital of Kilwer. The consideration for the acquisition has been satisfied in part by (i) the issue of 60,676,666 ordinary shares of 10 pence per share in Andes, to the vendors of Kilwer (the "New Ordinary Shares"); (ii) the issue of a US$10,000,000 convertible bond with a term of 5 years and an interest rate of 11% per annum; and (iii) the issue of a US$25,000,000 bond with a term of 10 years and an interest rate of 11% per annum.

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