Criterium Energy, an independent upstream energy development and production company focused in Southeast Asia, has executed a sale and purchase agreement ('SPA') on June 14, 2023 to acquire all the issued and outstanding shares of Mont D'Or Petroleum Limited ('MOPL'). MOPL holds 100% operating working interests in two Production Sharing Contracts ('PSC') in Indonesia, the Tungkal PSC located onshore South Sumatra which produces 1,030 bbl/d and contains 2P Reserves of 4.6 MMbbl and the West Salawati PSC located in Southwest Papua that produces 20 bbl/d and contains 2P Reserves of 0.1 MMbbl(1). Collectively, Tungkal and West Salawati have been independently valued at US$58 million NPV101 after tax.
This transformative acquisition will establish Criterium as an operator in Southeast Asia while providing immediate production and operating cash flow. The Acquisition is aligned with Criterium's strategy of building a balanced portfolio of low-risk producing assets with tangible reinvestment opportunities in the form of production optimization, infill drilling, and step-out developments.
The Company is also pleased to announce that it has filed and been receipted for a preliminary short-form prospectus in connection with a marketed agency equity public offering of subscription receipts of the Company at a price per Subscription Receipt to be determined in the context of the market, for aggregate gross proceeds of up to $22 million (US$16 million equivalent). The Offering is being led by Research Capital Corporation, as lead agent and sole bookrunner, on behalf of a syndicate of agents, including Canaccord Genuity Corp. and Stifel FirstEnergy.
Acquisition Highlights
- Immediate Cash Flow and Production: Collective production of approx. 1,050 bbl/d(1).
- Significant Upside Identified: Production optimization via workovers and infill drilling to achieve expected production of 1,400 - 1,600 bbl/d by Q4 2023/Q1 2024 and fiscal year-ended 2024 expected production of 2,200 - 2,600 bbl/d, funded from cash flow1, with the expectation to generate US$25 million EBITDA in 2024(2).
- Mature Development and Exploration Inventory: 2C resource of 6.5 MMboe(1), including 20 bcf of natural gas and a mature prospect inventory near infrastructure. Total Prospective Resources of 29 MMboe(1).
- Established Operating Business: MOPL has a strong 15-year track record of safe operations in Indonesia and provides Criterium with a reputable and talented operating and technical team from which to expand operations.
- Assumption of Favourable Debt: Acquiring MOPL in consideration of assuming US$32.5 million of outstanding debt which Criterium will reduce to US$19.7 million post-closing through cash payments (US$7.9 million) and conversion to equity (US$2.5 million Common Shares at closing and US$2.4 million converted in 20253). Favourable weighted average interest rate of 7.9%.
- Strong Cash Position: Upon closing of the Acquisition, MOPL will hold a cash balance of approx. US$17 million (approx. US$8 million cash from the Offering and US$9 million of MOPL cash). Creating a resilient balance sheet which will utilize cash to execute drilling and workover campaigns while ensuring the debt amortization is met.
- Strategic Shareholder: Upon closing of the Acquisition, Criterium will issue US$1 million common shares of the Company(3) to Tourmalet Holdings, a company owned by the founding partners of Provident Capital Partners, a leading Southeast Asia focused investment firm which has successfully built multiple billion-dollar businesses in Indonesia. Current MOPL shareholders, which includes Tourmalet, will receive contingency payments upon certain price and production thresholds(4).
Robin Auld, Chief Executive Officer of Criterium Energy
'Mont D'Or is a foundational acquisition for Criterium and establishes our Company as a reputable operator in Indonesia and Southeast Asia. By acquiring MOPL we integrate a seasoned team which safely operates over 1,000 bbl/d that generates a stable and scalable cash flow base which we intend to grow rapidly. With the recently announced 2042 Tungkal PSC extension, we intend to execute annual drilling programs to fully realize MOPL's potential to deliver long-term sustainable production growth within cashflow.
As we bring the Mont D'Or team into Criterium, this is an energizing period for our expanding team and our shareholders. The financing arrangements we announce today strengthen our balance sheet and provide flexibility to execute our ambitious growth objectives with MOPL and future acquisitions in the region. We have the experienced team to capture these opportunities and deliver significant value for our shareholders.
We are excited to be working with Research Capital, Canaccord, and Stifel to broaden our global shareholder base and to further enhance global exposure and liquidity. To support this expanded shareholder base we may consider a dual-listing on the London Stock Exchange's AIM market, alongside the current listing on the TSXV in Canada.'
Gavin Caudle, Founding Partner of Provident Capital Partners
'This transaction is aligned with our core principle of partnering with strong management teams in good businesses. We are confident that the Criterium team will build upon MOPL's strong reputation established from over 15 years of operations to realize significant value creation. We invest for the long term and as a shareholder of Criterium we will support the team and push them to build an industry-leading business to align with the other companies within our portfolio. I look forward to working with the Criterium team to optimize MOPL as they springboard to other accretive transactions.'
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Source: Criterium Energy
