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Molopo Energy has entered an agreement to sell its Queensland Bowen basin coalbed methane assets to a wholly-owned subsidiary of PetroChina International Investment Co. for US $43 million plus a $2.5 million adjustment for working capital.
The transaction is subject to review by the Australian Foreign Investment Review Board (FIRB) and the purchaser obtaining approval from the Chinese National Development Reform Commission (NDRC) which must be obtained within 60 days unless otherwise extended. Settlement of the transaction is expected to occur 30 days after the later of the FIRB and NDRC conditions being satisfied.
“We’re pleased to have reached agreement for this sale, which is an important step in our previously stated strategy of focusing on our unconventional North American oil assets,” said Molopo CEO Tim Granger said. “The sale proceeds, combined with our existing strong cash position, will be used to fund our 2013 capital program as we enter a period of intensive development of our Texas Wolfcamp oil acreage. We have conducted a very thorough sales process for these coal bed methane assets and are confident that this transaction is the optimal outcome for shareholders.”
As the anticipated sale proceeds are less than carrying value of the Queensland asset and the disposal costs, Molopo expects to recognize a before tax impairment to its June 30 accounts of approximately $24 million. No cash tax is anticipated as this transaction will be offset against accumulated tax losses.