Investing.com signs letter of intent to acquire 40% operating stake in Sinu-9 gas license in Colombia

PARIS–( BUSINESS WIRE )–Regulatory news:

Maurel & Prom (Paris: MAU):

• Onshore gas assets ready for production and development, strategically located with key infrastructure
  • Located in the Sinu San Jacinto basin and connected to the Promigas pipeline with direct access to coastal urban and industrial areas in northern Colombia
  • High quality property with recently developed facilities
  • First gas achieved in November 2024 as part of an ongoing long-term test
  • Current infrastructure exists for gross production of up to 40 mmcfd (16 mmcfd net on acquired 40% working interest) with further development to increase production well beyond this initial level
• Proven reserves with significant exploration and evaluation potential
  • A fertile basin with multiple producing fields in the area and strong geological continuities
  • Gross proved plus probable (2P) and proved plus probable plus possible (3P) reserves of 158.8 bcf and 340.8 bcf respectively as of December 31, 2023 (respectively 63.5 bcf and 136.3 bcf net at 40% of acquired work interest)
  • Multiple prospects, several of which are ready to be drilled over the next 18 months
• Very strong fundamentals for the Colombian domestic gas market
  • A strategic source of gas for the structurally undersupplied Colombian market, it is projected to be 30% short of demand by 2026.
  • Spot domestic gas prices above $8/mmBtu from Q4 2024
  • The supply shortage situation is expected to last for at least the next five years, while the identified new gas sources in the country will have high development costs (offshore fields).
• Strategic opportunity for M&P to expand in Colombia
  • M&P has been present in the country for more than 20 years
  • Cash Flow Diversification: Non-Brent Income in a Stable OECD Oil and Gas Jurisdiction
  • Purchase consideration of $150 million (from an effective date of February 1, 2025), funded entirely from M&P’s existing cash resources and available facilities
  • M&P will have a 12-month option from closing to acquire an additional 5% working interest in Sinu-9 from NG Energy on the same terms ($18.75 million consideration with the same effective date)

Etablissements Maurel & Prom SA (“M&P”, Group) is pleased to announce that it has entered into a letter of intent with NG Energy International Corp. (NG Energy), listed on the TSX Venture Exchange in Toronto, to acquire a 40% operating interest in the Sinu-9 gas license in Colombia for a consideration of USD 150 million with an effective date of February 1, 2025. Pursuant to the Letter of Intent, the parties have agreed to do their best to expeditiously conclude a final agreement in accordance with the letter of intent.

Olivier de Langavant, Chief Executive Officer of M&P, said: This acquisition represents a key step in M&P’s growth, bringing the Group an operating stake in a fertile and highly prospective gas license. The asset is at an early stage of development, allowing us to leverage our operational expertise to develop all existing resources and bring a domestic source of gas to the Colombian market. This marks a significant milestone in our history in Colombia, re-establishing M&P as an operator in the country with significant organic growth potential. NG Energy has done a great job in bringing this asset to first gas and we look forward to developing our relationship as a partner on Sinu-9.

Property description

The Sinu-9 gas block is located in the Lower Magdalena Valley, 75 km from the Caribbean coast of Colombia, and covers an area of ​​approximately 1,260 square kilometers in the department of Córdoba. The Sinu-9 gas block is located in the Sinu San Jacinto Basin, adjacent to the producing gas blocks held by Canacol and Hocol. NG Energy is currently the operator of the block and owns a 72% working interest in the license, together with Desarrolladora Oleum, SA DE CV (15%), Clean Energy Resources SAS (7.8%) and FG Inc. (5.2%).

The area has established infrastructure with access to the Promigas pipeline, Colombia’s northern main pipeline, at the Jobo junction.

Sinu-9 achieved its first gas production in November 2024, as part of the ongoing long-term testing of the Magico-1X and Brujo-1X wells. The infrastructure exists for gross production of up to 40 mmcfd (16 mmcfd net on the acquired 40% working interest), and further development will significantly increase production above this initial level.

The block had gross 2P and 3P reserves of 158.8 bcf and 340.8 bcf, respectively, as of December 31, 2023 (63.5 bcf and 136.3 bcf of 2P/3P reserves net of 40% acquired working interest) , based on NG Energy’s latest certified reserves report prepared by Sproule International Limited (Sproule), an independent qualified reserves estimator, whose report was prepared using the guidelines outlined in the Canadian Oil and Gas Appraisal Manual.

Sinu-9 has significant exploration and appraisal advantages, in a very prolific gas basin with multiple producing fields in the area. Multiple prospects and prospects are set to be drilled over the next 18 months and are expected to significantly increase the resource base.

Sinu-9 is fully licensed to drill 22 wells from 11 locations, with an environmental permit issued by Colombia’s National Environmental Licensing Authority (ANLA). The infrastructure is fully ready for the first phase of development, with 40 mmcfd of gross processing and export capacity.

M&P experience in Colombia

The group has been active in Colombia for more than 20 years, and this transaction marks its return as an operator of production assets in the country. To date, M&P has successfully invested close to $1 billion in Colombia, achieving very high returns. Colombia is a stable and established oil and gas jurisdiction, well known to M&P, which strategically complements our other operations across Africa and Latin America. In addition to near-term growth and asset development, the contemplated transaction positions M&P to increase size and scale in Colombia by leveraging its operational capabilities.

As a result of the decline of its large mature fields, Colombia’s natural gas market currently faces an imbalance between local production and demand, leading to high prices and dependence on liquefied natural gas imports. Spot domestic gas prices have been steadily rising to exceed $8/mmBtu as of the fourth quarter of 2024. This supply shortfall is expected to last at least until 2030, and the development of possible additional production capacity will be expensive.

Financing

The $150 million fee will be funded from M&P’s existing cash resources and available credit facilities ($260 million as of December 31, 2024).

Conditions

The closing of the transaction is subject to the negotiation and execution of a definitive agreement between the parties, the receipt of regulatory approvals, including the approval of Colombia’s National Hydrocarbons Agency (ANH), and the satisfaction of other customary closing conditions.

M&P will have a 12-month option from closing to acquire an additional 5% working interest in Sinu-9 from NG Energy on the same terms: consideration of $18.75 million, with the same effective date of February 1, 2025.

advisors

Hannam & Partners is acting as the exclusive financial advisor to M&P. Herbert Smith Freehills LLP, Torys LLP and MartÃnez Quintero Mendoza González Laguado & De La Rosa are acting as legal advisors to M&P.

About NG Energy

NG Energy International Corp. is a growth-oriented natural gas exploration and production company listed on the TSX Venture Exchange in Toronto, and is focused on providing long-term value to shareholders and stakeholders through the discovery, delineation and development of large natural gas fields in developing countries, supporting the energy transition and economic growth . The NG Energy team has extensive technical and capital market expertise with a proven track record of building companies and creating significant value in South America. To date, more than $100 million has been invested in the exploration and development of its two major gas assets in Colombia, Sinu-9 and Maria Conchita. For more information, you can visit the NG Energy website (www.ngenergyintl.com).

Glossary

For more information, visit www.maureletprom.fr/en/

This document may contain forward-looking statements regarding Maurel & Prom’s financial position, results, business and industrial strategy. By their very nature, forecasts involve risk and uncertainty to the extent that they are based on events or circumstances that may or may not occur in the future. These forecasts are based on assumptions that we believe to be reasonable, but which may prove to be incorrect and that depend on a number of risk factors, such as price fluctuations, exchange rate changes, uncertainties related to the estimation of our oil reserves, actual oil production rates and related costs, operational problems, political stability, legislative or regulatory reforms or even wars, terrorism and sabotage.

Maurel & Prom is listed on Euronext (EPA:) Paris
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Source: Maurel & Prom SA