Modena Resources Limited (MDA) announces that it has signed a non binding agreement to acquire a 14.17% interest in a privately held company, which owns production, development, and exploration assets in California, which as of 31 December 2008, had estimated proved and probable reserves of 24 million barrels of oil equivalent. Subject to the satisfaction of all the conditions, the Company will acquire a 14.17% interest in the Target for 24,400,000 million fully paid new ordinary shares of the Company at an issue price A$0.15 per share. Additionally, the parties have agreed on a deferred consideration equivalent to a value of US$11.5 million, less the value at the completion date of the shares initially issued, payable in cash or new shares of the Company by December 2010, at Modena’s election. Modena will also seek to acquire up to an additional 5.83% shareholding in the Target on the same basis as above, which could potentially take Modena’s total shareholding in the Target to 20.00%.
The acquisition is subject to Satisfactory completion of due diligence by the Company on the Target; the selling Target shareholders securing the written consent and pre-emption approval of the majority shareholder to transfer the sale shares to the Company and execution of a sale and purchase agreement and ancillary documentation.
Commenting on the proposed transaction, Modena’s Chairman, Wayne Bellman, said: “The acquisition is potentially a very significant, high quality opportunity for Modena; one that could add considerable production and proven reserves and has the ability to deliver substantial value to our shareholders. The Target has a low risk, high quality portfolio of oil & gas assets in a geography that we like because it is a large energy market with a long production history and under utilized infrastructure. We look forward to updating shareholders and the market in due course. Modena also intends to strengthen its board over the coming months and is engaged in a search for a CEO with extensive oil and gas experience.”
