DUSHANBE, September 25, 2015, Asia-Plus — Tethys Petroleum Limited (Tethys) announces that Tethys and Nostrum Oil & Gas PLC (Nostrum) have entered into a non-binding and indicative letter of intent (LOI) setting out proposed terms upon which Nostrum would acquire the entire issued and to be issued share capital of Tethys (the Proposed Offer).
According to press release issued by Tethys on September 23, the Tethys has agreed to grant Nostrum a limited period of exclusivity until 11:59 p.m. London time on October 6, 2015 (unless such date is mutually agreed to be extended by the parties) in connection with the Proposed Offer and any potential resulting formal offer.
In connection with the Proposed Offer, Nostrum has also proposed the terms of a potential interim financing facility of up to US$20 million (the Interim Financing) to fund the Company’s cash requirements from the date of the execution of key transaction documents through until the date of completion of any formal offer.
The Proposed Offer reportedly provides for a price of C$0.147 per Tethys share, which would be settled in fully paid ordinary shares of Nostrum. This price represents a premium of 63% to the closing market price of an ordinary share of Tethys on the TSX on September 22, 2015. The exchange ratio of Nostrum to Tethys shares would be 1 Nostrum share for every 69.4333 Tethys shares, representing the closing price of GBP 5.005 of a Nostrum share on the London Stock Exchange on September 22, 2015 and the CAD/GBP closing exchange rate on September 22, 2015 of 2.0393 CAD to 1.00 GBP.
Conditions of the Proposed Offer, amongst others, include the following: receipt of all necessary and relevant governmental and joint venture partner consents in Kazakhstan, Tajikistan and Georgia; certain additional customary conditions as to the status of the business and financial condition of Tethys up until completion of the Proposed Offer; the receipt of irrevocable undertakings from each director of Tethys to accept a formal offer (on the terms above) in respect of each of the Tethys shares in which they are beneficially interested; receipt of support for the Proposed Offer from the three major shareholders of Tethys in form and substance satisfactory to Nostrum; the receipt of acceptances in respect of 75% of the Tethys shares to which the Proposed Offer relates, or such lower threshold above 50% as Nostrum may determine; and other customary conditions.
Tethys has currently not paid the most recent cash call issued by the Bokhtar Operating Company in connection with Tethys’ Tajik asset. A payment is required to be made by October 9, 2015 in order to remedy this non-payment and avoid the Tethys’ contractor party being subject to various potentially very onerous remedies that other contracting parties may seek to enforce under the Joint Operating Agreement relating to Tethys’ Tajik assets, which may result in a significant impairment of the value of these asset. If binding documentation has not been entered into in connection with the Interim Financing by the end of the Exclusivity Period, it is very likely that the Company will not be able to make the payment within the prescribed timeframe that would prevent the aforementioned scenario arising.
Nostrum is an independent oil and gas company currently engaging in the production, development and exploration of oil and gas in the pre-Caspian Basin. Its shares are listed on the London Stock Exchange (ticker symbol: NOG). The principal producing asset of Nostrum is the Chinarevskoye field, in which it holds a 100% interest and is the operator through its wholly-owned subsidiary Zhaikmunai LLP. In addition, Nostrum holds a 100% interest in and is the operator of the Rostoshinskoye, Darinskoye and Yuzhno-Gremyachenskoye oil and gas fields through the same subsidiary. Located in the pre-Caspian basin to the north-west of Uralsk, these exploration and development fields are situated approximately 60 and 120 kilometers respectively from the Chinarevskoye field.
Tethys Petroleum Limited is an oil and gas exploration and production company currently focused on Central Asia and the Caspian Region with projects in Kazakhstan, Tajikistan and Georgia. This highly prolific oil and gas area is rapidly developing and Tethys believes that significant potential exists in both exploration and in discovered deposits.
Kulob Petroleum Limited, a Tajikistan-based wholly-owned subsidiary of Tethys, signed a farm-out agreement (FOA) for the Bokhtar Production Sharing Contract (PSC) in Tajikistan with subsidiaries of Total S.A. (Total) and the China National Oil and Gas Exploration and Development Corporation (CNODC).
Singed in 2008, the 25-year Bokhtar PSC reportedly covers a total area of approximately 35,000 square kilometers in the Afghan Tajik portion of the prolific Amu Darya basin west of the Pamir mountains. The area included in the PSC is in the south-western part of Tajikistan and is a large, highly prospective region which has existing oil and gas discoveries but which has seen limited exploration to date.
