TAG Oil Ltd. (TSE:TAO) said Wednesday that it has agreed to sell assets and operations in New Zealand’s Taranaki Basin to Australia-based Tamarind Resources Pty Ltd for US$30 million, plus a share of royalties and benchmark payments.
"We are very pleased to announce this transaction for TAG's New Zealand assets, which presents an attractive premium to the current market value of the assets for TAG shareholders,” TAG CEO Toby Pierce said in a statement.
Assets included in the deal are PMP 38156 (Cheal and Cardiff), PMP 53803 (Sidewinder), PMP 60454 (Supplejack), PEP 51153 (Puka), PEP 57065 (Waitoriki), and TAG's 70% interest in PMP 60291 (Cheal East) and PEP 54877 (Cheal East).
The deal is subject to the approval of two-thirds of votes cast in person or by proxy by holders of common shares of Vancouver-based TAG at a special meeting in December 2018. The transaction is also awaiting approval from the Toronto Stock Exchange and New Zealand regulators.
In addition to a cash payment of US$30 million, TAG is to receive a 2.5% gross overriding royalty on the assets' future production and up to US$5 million in payments when benchmarks are met.
PillarFour Securities is acting as financial adviser to TAG with respect to the transaction and has provided the board with a fairness opinion. FirstEnergy Capital LLP has provided a fairness opinion to a special committee of the board and other members.
Blake, Cassels and Graydon LLP is acting as Canadian legal counsel to TAG, while Greenwood Roche is acting as New Zealand legal counsel to TAG.
Shares of TAG closed at $0.40 in Tuesday’s Toronto Stock Exchange trading.