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    Armour to Demerge Northern Basin Biz

Summary

The demerged entity, McArthur Oil & Gas, will be listed separately on the Australian Securities Exchange.

by: Shardul Sharma

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Armour to Demerge Northern Basin Biz

Australian explorer Armour Energy is planning to demerge its Northern basin oil and gas business into a newly formed company – McArthur Oil & Gas – to be separately listed in Sydney, it said on March 2. 

McArthur Oil & Gas will be demerged from Armour through an in-specie share distribution to existing shareholders. An initial public offering (IPO) and capital raise of A$60-A$65mn (US$47mn-US$51mn) has been proposed to fund the acquisition of Northern basin assets from Armour and to fund forward exploration. 

“It is proposed that McArthur Oil & Gas will enter into a conditional agreement to acquire from the company the Northern basin business for consideration of A$40mn plus a minimum 33.3% retained interest by Armour shareholder in McArthur Oil & Gas subject to amongst other matters, the completion of an IPO and ASX listing of McArthur Oil & Gas,” Armour said. 

According to Armour, it is the 100% owner and operator of six granted exploration permits and seven exploration permit applications covering approximately 89,000 km2 in the Northern Territory and the 100% owner and operator of a material position in the South Nicholson basin in northwest Queensland with one exploration permit application covering approximately 7,900 km2. 

Following the completion of the demerger, Armour will focus on exploration in both the Surat and Cooper basins. It intends to use the funds received from McArthur Oil & Gas for the Northern basin business to retire a proportion or all of its outstanding debt.  

“Through the proposed demerger the company is simultaneously delivering two value-creating outcomes for shareholders – unlocking the value of the Northern basin business and delivering this directly to shareholders dealing and removing the debt burden on the company so it can focus on delivering the operational performance from the Surat basin and building on the untapped exploration potential of both the Cooper and Surat basins,” CEO Brad Lingo said.