Strata-X Energy has pre-empted a third party offer to buy out Magnum Power and Gas’s (MPE) 25% interest in the Serowe coal seam gas (CSG) project in Botswana.
The decision to pre-empt the offer is expected to give the company flexibility in developing the resources outside of a restrictive farmin agreement and grants it greater optionality to use the value in the Serowe CSG tenement instead of shareholder dilution.
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The Serowe project is a 273,000 acre, 1.4Tcf prospective resource, located in the Kalahari Basin CSG Fairway.
Under the pre-empt offer, Strata-X needs to make an immediate deposit of A$25,000 ($19,571.7) to MPE along with execution of the formal purchase and sale agreement (PSA) by the end of next year.
Once the PSA is executed and closing conditions are satisfied, the company is required to pay MPE A$125,000 ($97,858.5) in cash and grant a 3.5% overriding royalty interest in the tenements net to MPE’s 25% bought-out ownership.
Strata-X Energy board chairman Ron Prefontaine said: “We are excited to have full control of our Botswana asset and can now dictate its development at a pace that maximises our capital.
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By GlobalData“Strata-X plans to use the latest, ultra-low cost innovative technologies and methods to develop and convert this gas resource to reserves.
“By converting the significant gas resources in these tenements to reserves, and given the huge and diverse gas markets in Botswana and surrounding southern African countries, in my view, SXA has the potential to repeat the exponential growth of the early small cap Queensland CSG explorers.”
The company will make an additional payment of A$200,000 ($156,574) to MPE, within 60 days of closing the PSA along with a further A$200,000 ($156,574) within 135 days of closing the PSA.
The final pre-empt agreements are expected to be executed by the end of the first quarter of this year.
