/NOT FOR DISTRIBUTION IN OR INTO THE U.S. OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH DISTRIBUTION MAY BE PROHIBITED BY APPLICABLE LAW./
CALGARY, Sept. 18, 2012 /CNW/ - Griffiths Energy International Inc. ("Griffiths" or the "Company") is pleased to announce it has signed a Heads of Terms Agreement (the "Agreement") with Glencore International plc ("Glencore") for the development of the Mangara and Badila oil fields.
Under the terms of the Agreement, Glencore will earn 25% working interest in the Mangara and Badila Exclusive Exploitation Authorizations (the "EXA's") leaving Griffiths with 50% working interest and Société des Hydrocarbures du Tchad ("SHT") with 25% working interest. In consideration for the working interest in Mangara and Badila, Glencore will fund US$ 300 million of the Company's working interest share of future joint venture expenditures in the Mangara and Badila oil fields up to a maximum of US$ 100 million per year (the "Carried Amount"). The effective date of the Agreement is July 1, 2012 ("Effective Date"). Under the terms of the EXA's, the Company and Glencore are required to fund SHT's costs and are reimbursed through cost oil.
In addition, Glencore will acquire a 33.3% working interest in the Exclusive Exploration Authorizations, granted under each of the Company's three production sharing contracts in the Republic of Chad (the "PSCs"). In consideration for the assignment of the working interest, Glencore will pay to the Company approximately US$ 31 million on closing representing 33.3% of the Company's unrecoverable costs related to the three PSCs as of the Effective Date, subject to audit.
"This transaction, once closed, allows Griffiths to accelerate the development of the Mangara and Badila oil fields with a 2014 target exit rate of 50,000 bopd (gross). This Agreement, along with the recent capital raise of US$ 173.6 million and the expected cash flow from these fields, provides the required capital to fast track an aggressive exploration program in 2013 and 2014," stated Gary Guidry, President and Chief Executive Officer.
Alex Beard, Director of Glencore's Oil Commodity Department, commented: "We are pleased to announce our investment in the Republic of Chad. This is an exciting opportunity to work in a joint-venture with Griffiths and the Government of Chad to help fast track the development of a region with long term growth potential."
The above transactions are subject to the Government of Chad approval, waiver of any pre-emption rights by the Company's partner, and related definitive agreements based on the commercial terms in the Agreement. The transaction is expected to close within 90 days. Nomura International plc, RBC Capital Markets, and First Energy Capital LLP provided strategic advice to Griffiths in relation to this transaction.
About Griffiths Energy International Inc.
Based in Canada, Griffiths is an international exploration and development Company focused on oil and gas exploration, development and production activities in the Republic of Chad, Africa. In 2011, the Company acquired the PSCs from the government of the Republic of Chad. These PSCs provide exclusive rights to explore and develop reserves and resources over a combined area of 26,103 km2 in southern Chad. The PSCs cover two world class oil basins with development opportunity, oil discoveries, and numerous exploration prospects.
THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO PURCHASE ANY SECURITIES IN THE UNITED STATES. THE SECURITIES REFERRED TO HEREIN (INCLUDING THE BONDS AND THE COMMON SHARES) HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE LAWS OF ANY STATE WITHIN THE UNITED STATES, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S UNDER THE SECURITIES ACT), EXCEPT IN A TRANSACTION NOT SUBJECT TO, OR PURSUANT TO AN APPLICABLE EXEMPTION FROM, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR ANY STATE SECURITIES LAWS. NO OFFERING OF THE BONDS OR THE COMMON SHARES IS BEING MADE, AND THERE WILL BE NO PUBLIC OFFER OF THE SECURITIES IN THE UNITED STATES OR IN ANY OTHER JURISDICTION.
This announcement is directed only at persons (i) who are outside the United Kingdom or (ii) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") or (iii) who fall within Article 49(2)(a) to (d) of the Order or (iv) to whom this Announcement may otherwise be directed without contravention of section 21 of the Financial Services and Markets Act 2000 (all such persons together being referred to as "Relevant Persons"). This announcement is directed only at Relevant Persons and must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this announcement relates is available only to Relevant Persons and will be engaged only with Relevant Persons.
FORWARD LOOKING STATEMENTS
Certain of the information contained in this press release constitutes forward-looking statements under applicable securities law. Any statements that are contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "expects", "seeks" and similar expressions. Specific forward-looking statements included in this press release include comments related to the closing of the transaction with Glencore and the timing of such closing, the timing of the development of the joint venture assets and the expenditures by the joint venture and the targeted future production of the Company's assets.
SOURCE: Griffiths Energy International Inc.
For further information:
President and Chief Executive Officer
Griffiths Energy International Inc.
Chief Financial Officer
Griffiths Energy International Inc.