SYDNEY: Galilee Energy Ltd. has entered a binding agreement to sell its Glenaras Gas Project to Novus Energy Production Co. Pty Ltd. for an undisclosed sum, the company announced Monday, as it pivots to concentrate on building a U.S. Gulf Coast oil and gas business.
The Australian Securities Exchange-listed company will sell its wholly owned subsidiary, Galilee Resources Pty Ltd., which holds ATP 2019 and the associated environmental authority in Queensland’s Galilee Basin. Under the deal, Galilee will receive reimbursement of approximately A$1.34 million in cash-backed security deposits currently supporting the project’s environmental financial assurance.
A further A$500,000 in deferred cash consideration could become payable following the achievement of an agreed project financing milestone.
Galilee will retain a 2% net overriding royalty on future production from Glenaras, though that exposure will be reduced by a 1% overriding royalty payable to financial adviser Miro Capital Pty Ltd. as part of the transaction.
“The scale and development pathway of Glenaras require a level of dedicated funding and management focus that is no longer aligned with Galilee’s strategic direction,” Managing Director Joseph Graham said in a statement.
Galilee is now focused on establishing a scalable oil and gas business in the U.S. Gulf Coast, targeting opportunities with shorter development timeframes, access to existing infrastructure and earlier production and cash flow, Graham said.
The company’s initial U.S. foundation asset is the Zydeco Gas Project in Acadia Parish, Louisiana. Galilee is also actively evaluating further Gulf Coast opportunities through its U.S. advisory board and technical team.
The Glenaras Project requires further appraisal, technical work and substantial development funding before it could advance toward commercial production. Following completion, the future capital requirements will become the responsibility of the purchaser.
Completion remains subject to customary conditions, including regulatory approvals and third-party consents. The conditions must be satisfied or waived by the date falling one month after execution of the share sale agreement.
“There is no certainty that all conditions precedent will be satisfied or waived, that completion will occur on the anticipated timetable, or that the transaction will complete at all,” the company noted in its disclosure.
Galilee has engaged Miro Capital Pty Ltd. as its financial adviser for the divestment, with fees comprising a monthly retainer and a transaction fee payable on completion.
The transaction, when completed, will transfer the Glenaras group of companies together with the project’s future funding requirements, rehabilitation obligations and associated liabilities to the purchaser.
