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Ivanhoe Energy Inc.’s wholly owned subsidiary, Sunwing Zitong Energy, has signed a definitive sale and purchase agreement with Shell China Exploration and Production Co., transferring its interest in the contract for exploration, development, and production in the Zitong block, Sichuan basin of the People’s Republic of China to Shell.
Sunwing's partners in the Zitong block are Mitsubishi Gas Chemical (MGC) and China National Petroleum Corp. (CNPC). According to the contract and relevant agreements, Sunwing may assign rights and obligations under the petroleum contract to any third party, provided that such an assignment is agreed to by CNPC in advance and approved by the Ministry of Commerce of the People's Republic of China (the Ministry), a news release said. Additionally, CNPC and MGC must waive their right of first refusal (ROFR).
Sunwing received MGC's ROFR waiver on June 30, and CNPC informed Sunwing that its waiver is part of the amendment agreement to the petroleum contract that was signed by CNPC, Sunwing, Shell, and MGC on Oct. 9, according to the release. CNPC will now submit the transfer request to the ministry for its review and final approval.
Ivanhoe Energy and Shell anticipate closing the transaction by the end of 2012. All previously disclosed key commercial terms remain until year-end. Additional commercial terms have been negotiated that provide Ivanhoe Energy with US $85 million in consideration, should the final condition be met after Dec. 31, according to the release. If the ministry's approval has not been received after 12 months from the date of submission of the amendment agreement, the deal may be terminated.