TAG Oil Ltd., Vancouver, BC, along with certain subsidiaries in New Zealand, has agreed to sell substantially all its Taranaki basin assets and operations in New Zealand to Tamarind Resources Pte. Ltd., Kuala Lumpur, and certain subsidiaries.
The sale would include TAG's 100% working interests in PMP 38156 (Cheal and Cardiff), PMP 53803 (Sidewinder), PMP 60454 (Supplejack), PEP 51153 (Puka), PEP 57065 (Waitoriki), and TAG's 70% interest in PMP 60291 (Cheal East) and PEP 54877 (Cheal East).
The agreement calls for TAG to receive a cash payment of $30 million at closing, a 2.5% gross overriding royalty on future production from all the sold assets, and as much as $5 million in event specific payments payable on achieving various milestones—the first being the achieved grant of PMP 60454 (Supplejack) conversion, triggering payment of $500,000 at closing.
The sale puts TAG in a better position to pursue its exploration prospects covering over 275,000 net acres in Australia, including the producing 25,000-acre petroleum mining license in the Surat basin, the company said.
The agreement provides for, among other things, a nonsolicitation covenant on the part of TAG, subject to a “fiduciary out” provision that entitles TAG to consider and accept a superior proposal and a noncompletion fee of $1 million if the deal is terminated by TAG in certain circumstances, including if the company enters into an agreement with respect to a superior proposal.
Completion—expected in first-quarter 2019—is subject to conditions, including TSX acceptance, shareholder approval, and New Zealand regulatory approval.