Magellan Petroleum To Sell Onshore Australia Assets For A$35.0 Mln

(RTTNews) - Magellan Petroleum Corp. (MPET) announced that it has entered into a definitive agreement to sell the Palm Valley and Dingo gas fields to Central Petroleum Limited (CTP.AX) through the sale of its wholly owned subsidiary Magellan Petroleum (N.T.) Pty. Ltd.

In exchange, Central Petroleum will pay to Magellan a total of A$35.0 million in cash and Central stock. In addition, Magellan will receive bonuses from Central Petroleum in the event that future gas sales revenues from Palm Valley exceed certain levels.

Of the A$35.0 million in consideration, A$20.0 million is payable in cash and A$15.0 million is payable in Central Petroleum stock upon transaction completion . The cash consideration will be paid in two tranches: A$15.0 million at Completion and A$5.0 million on or before April 15, 2014.

Completion is expected to occur no later than March 31, 2014, and is subject to certain customary completion conditions.

Central Petroleum is a Brisbane, Australia based, ASX-listed junior exploration and production company that operates one of the largest holdings of prospective onshore acreage in Australia. Central's acreage includes significant holdings in the Amadeus Basin that immediately surround Palm Valley and Dingo. As per the terms of the Sale deal, the A$15.0 million of consideration in the form of Central stock will result in the issuance of approximately 39.5 million shares of Central on the Completion date, representing an approximate 11% pro forma ownership in Central's common stock as of today's date. In addition, Magellan will be entitled to appoint one Director to serve on Central Petroleum's Board of Directors.

In completing the sale, the Company expects to incur no tax liabilities, approximately A$1.0 million of transaction costs, and approximately A$2.0 million of related wind-down expenses.

Thomas Wilson, president and CEO of the Company, said, " The sale of these gas fields for AUD $35.0 million now validates the soundness of that approach, and shareholders can look forward to a stronger balance sheet and a more focused portfolio of assets as a result. The AUD $20.0 million in cash proceeds from the transaction will allow the Company to fund its share of a first exploratory well in the UK, while maintaining a significant cash balance. By selling Dingo at this time, the Company will avoid the need to finance a AUD $20.0 million development, including necessary gas transportation facilities. The Company will also be able to close its Brisbane, Australia office, reducing consolidated general and administrative expense by between AUD $2.0 million and AUD $3.0 million per year and bringing the Company closer to operating cash flow break-even levels."