Magellan Petroleum Corp. recently announced a term sheet agreement with Young Energy Prize S.A. (YEP), outlining an agreement in principle for an additional investment of $15.6 million from YEP in Magellan.
Currently, YEP owns approximately 27 percent of the outstanding shares of Magellan’s common stock; upon closing of the transaction announced, YEP will own approximately 33 percent of the Magellan’s Common Stock.
Magellan’s president and CEO William H. Hastings said part of the equity will be used for its offshore work in Australia, with other portions contributing to various projects.
“This is the first step in the financing process for the purchase of a 40 percent interest in the Evans Shoal field, offshore Australia. We are working other, parallel initiatives which, when complete, will yield major new investment in the Company,” Hastings stated in the press release. “We expect to use the majority of equity funding for the purchase of the field interest and the planning, testing, analysis and drilling of Evans Shoal subject to the Evans Shoal joint-venture sanction and approval. A portion of the proceeds will go toward project development in addition to proceeds from other parallel initiatives.”
Since July 2009, YEP has served as Magellan’s strategic investor. YEP targets investment opportunities in the exploitation of underdeveloped oil and gas fields and in energy small-cap, equity issues.
“This is the first step toward an ambitious plan building key assets in strategic, low-cost areas to supply energy for the inevitable future demand growth in Asia,” J. Thomas Wilson, first vice president of YEP said.
The transaction is set to close within 120 days and the Term Sheet contemplates an outside closing date of October 31, 2010.
For more information on the company, visit www.magellanpetroleum.com