Signing of a Letter of Intent for the Acquisition of a 40% Operating Working Interest in the Sinu-9 Gas Licence in Colombia By Investing.com

PARIS–(BUSINESS WIRE)–Regulatory news:

Maurel & Prom (Paris:MAU):

• Onshore gas asset operating in production and ready for development, strategically located with key infrastructure in place
  • Located in the Sinu San Jacinto Basin and connected to the Promigas pipeline with direct access to coastal urban and industrial areas of northern Colombia
  • High quality asset with newly developed facilities
  • First gas reached in November 2024 in ongoing long-term test
  • Current infrastructure in place for gross production of up to 40 million cubic feet per day (16 million cubic feet per day net from acquired 40% working interest), with further development planned to increase production well beyond this initial level.
• Proven reserves with considerable potential for exploration and evaluation
  • Prolific basin, with multiple producing fields in the area and strong geological continuities
  • Proven plus probable (2P) and proven plus probable plus possible (3P) gross reserves of 158.8 billion cubic feet and 340.8 billion cubic feet respectively as of December 31, 2023 (63.5 billion cubic feet and 136 billion cubic feet, respectively). 3 billion cubic feet net to the 40% direct interest acquired)
  • Multiple prospects, including several ready to drill over the next 18 months
• Very solid fundamentals for the Colombian domestic gas market
  • Strategic gas resource for a structurally deficit Colombian market, which is expected to lack 30% of demand by 2026.
  • Domestic gas spot prices above $8/mmBtu in Q4 2024
  • The supply deficit situation is expected to last at least for the next five years, while the new gas resources identified in the country will entail high development costs (offshore fields).
• Strategic opportunity for M&P to expand in Colombia
  • M&P has been present in the country for over 20 years
  • Cash Flow Diversification: Non-Brent Income in a Stable OECD Oil and Gas Jurisdiction
  • Acquisition price of $150 million (effective date of February 1, 2025), fully funded by M&P’s existing cash resources and available facilities
  • M&P will have an option for 12 months from closing to acquire an additional 5% direct interest in Sinu-9 from NG Energy on the same terms ($18.75 million consideration with the same closing date). entry into force)

Etablissements Maurel & Prom SA (“M&P”, the Group) are pleased to announce that they have entered into a letter of intent with NG Energy International Corp. (NG Energy), listed on the Toronto TSX Venture Exchange, to acquire a 40% operated direct interest in the Sinu-9 gas license in Colombia for a consideration of $150 million from the date of effective February 1, 2025. Pursuant to the Letter of Intent, the parties have agreed to use their best efforts to quickly conclude a definitive agreement consistent with the Letter of Intent.

Olivier de Langavant, Managing Director of M&P, declared: This acquisition represents a key step in the growth of M&P, providing the Group with an operational stake in a prolific and high-potential gas permit. The asset is in an early stage of development, allowing us to leverage our operational expertise to develop all existing resources and bring a national source of gas to the Colombian market. This marks an important 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 bringing this asset to first gas, and we look forward to growing our relationship as a partner on Sinu-9..

Asset Description

The Sinu-9 gas block is located in the lower Magdalena Valley, 75 km from the Colombian Caribbean coast, 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 owned by Canacol and Hocol. NG Energy is currently the operator of the block and holds a 72% direct interest in the permit, alongside 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 gas pipeline, the main line in northern Colombia, at the Jobo connection point.

Sinu-9 achieved its first gas production in November 2024, as part of ongoing long-term testing of the Magico-1X and Brujo-1X wells. There is infrastructure in place for gross production of up to 40 million cubic feet per day (16 million cubic feet per day net from the acquired working interest of 40%), and further development will significantly increase the production beyond this initial level.

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

Sinu-9 presents considerable exploration and evaluation potential, in a very prolific gas basin with multiple producing fields in the region. Multiple leads and prospects are ready for drilling over the next 18 months and are expected to significantly increase the resource base.

Sinu-9 is fully licensed with environmental approval granted by the Colombian National Environmental Licensing Authority (ANLA) to drill 22 wells from 11 locations. The infrastructure is fully in place for the first phase of development, with 40 million cubic feet per day of gross processing and export capacity.

M&P’s 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 producing assets in the country. M&P has successfully invested nearly $1 billion in Colombia to date, generating very good returns. Colombia is a stable and established oil and gas jurisdiction, well known to M&P, which strategically complements our other operations in Africa and Latin America. With the near-term growth and development of the asset, the proposed transaction allows M&P to expand its size and scale in Colombia by leveraging its operational capabilities.

Due to the decline of its large, mature fields, the Colombian natural gas market currently faces imbalances between local production and demand, leading to high prices and dependence on imports of liquefied natural gas. Domestic gas spot prices are steadily increasing and exceed $8 per mmBtu in the fourth quarter of 2024. This supply gap is expected to last at least until 2030, with the development of possible additional production capacity having a high cost.

Funding

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

Terms

Closing of the transaction is subject to the negotiation and execution of a definitive agreement between the parties, receipt of regulatory approvals, including approval from the Colombian 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% direct interest in Sinu-9 from NG Energy on the same terms: consideration of $18.75 million, with the same date effective February 1, 2025.

Advisors

Hannam & Partners acts as exclusive financial advisor to M&P. Herbert Smith Freehills LLP, Torys LLP and Martínez 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 Toronto TSX Venture Exchange focused on creating long-term value for its shareholders and stakeholders through discovery, to the delineation and development of large-scale natural gas deposits in developing countries. , support the energy transition and economic growth. The NG Energy team has extensive technical and capital markets expertise with a proven track record of building businesses and creating significant value in South America. To date, more than $100 million has been invested in the exploration and development of its two main 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, go to www.maureletprom.fr/

This document may contain forecasts concerning the financial situation, results, commercial and industrial strategy of Maurel & Prom. By their very nature, forecasts involve risks and uncertainties because they are based on events or circumstances that may or may not occur in the future. These forecasts are based on assumptions that we consider reasonable, but which may prove to be erroneous and which depend on a number of risk factors, such as price fluctuations, changes in exchange rates, uncertainties related to the valuation of our oil reserves, actual rates of oil production and associated costs, operational problems, political stability, legislative or regulatory reforms, even wars, terrorism and sabotage.

Maurel & Prom is listed on Euronext (EPA:) Paris
“ “ “ “ PEA-PME and SRD eligible
Isin FR0000051070 / Bloomberg MAU.FP / Reuters MAUP.PA

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Source: Maurel & Prom SA