Empire Energy Group completes sale of US oil and gas assets for $9.1m
Empire Energy Group Limited has finalized an unconditional sale of its US-based subsidiary, Empire Energy E&P LLC, to PPP Future Development, Inc. for a total consideration of up to US$9.1 million. This significant transaction encompasses an upfront cash payment of US$5.9 million, with additional contingent and deferred payments totaling up to US$3.2 million. These financial arrangements reflect Empire Energy’s strategic divestment of its US oil and gas operations, which are primarily located in the Appalachian region.
The sale proceeds are structured to provide immediate financial liquidity and future earnings potential through contingent and deferred components. Specifically, the deal includes contingent deferred payments of up to US$2.3 million, linked to future gas price fluctuations, and deferred solar payments amounting to US$0.9 million related to the use of surface rights for renewable energy projects.
Empire Energy has also entered a Mutual Use Agreement with Connect Gen for the utilization of surface rights over 2,056 acres in Chautauqua County, New York. This agreement further stipulates additional deferred payments tied to specific milestones of the South Ripley Solar Project.
Empire Energy executes strategic sale of US oil & gas assets to enhance its focus on Australia’s Beetaloo Basin
This divestiture marks a pivotal shift for Empire Energy as it transitions to focus entirely on its operations in the Beetaloo Basin in Australia’s Northern Territory. Managing Director Alex Underwood expressed satisfaction with the successful execution of the asset sale, noting the significant reduction in US debt and the enhancement of financial flexibility to bolster the company’s Beetaloo project. “Empire will be a pure-play Beetaloo / McArthur Basin focused developer while retaining a free-carried interest in shale rights in the United States at little to no cost to shareholders,” stated Underwood.
The transaction also includes the retention of a 3.75% carried working interest in the shale formations below the Medina Sandstone formation, ensuring ongoing economic interest in the US sector without burdening shareholders.
The completion of the transaction is expected by 5pm US Eastern Time today, with no conditions precedent. Following the closure, Empire Energy’s existing obligations under the US Macquarie Bank credit facility will be fully repaid, freeing up an additional US$2.2 million in cash to support further development activities in the Beetaloo Basin.
The strategic divestiture by Empire Energy Group signifies a focused realignment towards exploiting the high-potential Beetaloo Basin assets. This move not only enhances Empire’s financial structure by eliminating substantial debt but also positions it to capitalize on emerging opportunities within Australia’s energy market, potentially delivering significant returns to shareholders and stakeholders in the region.