OilVoice - Global Acquires African Petroleum in a A$500 million Deal

Global Acquires African Petroleum in a A$500 million Deal

Tuesday, February 09, 2010

Highlights
• Global signs Share Sale Agreement ('Agreement') to acquire African Petroleum Corporation Limited ('APCL'), a company incorporated in the Cayman Islands,
• On completion, APCL will have the rights to two highly prospective oil and gas exploration blocks off the coast of Liberia, West Africa, covering a total licence area of approximately 7,200km2,
• Independent oil and gas specialist consultant, IHS Global, has determined that the Liberian blocks have potential for combined un-risked total P50 recoverable prospective resources 1875 million barrels with a range of 945 (P90) to 3043 (P10) million barrels,
• The Agreement is conditional on Global completing a placement of shares to raise not less than A$130 million and up to A$230 million,
• Experienced executive team to join Global management and Board,
• Acquisition valued at approximately A$500 million,
• Global to change its name to African Petroleum Corporation Limited on obtaining the necessary shareholder approvals,

ASX listed Global Iron Limited has entered into what it believes is a 'company transforming' transaction to acquire private company APCL which, on completion, will own the rights to two highly prospective oil and gas exploration blocks located in offshore Liberia, West Africa ('Blocks 8 and 9') (refer Annexure A) in a deal valued at approximately A$500 million (based on approximately 906 million shares issued at a price of A$0.55 per share) ('Acquisition').
Independent oil and gas specialist consultant, IHS Global, has carried out a Competent Persons Report and provided an assessment of the prospective resources on the blocks. The report includes the conclusion that the three Upper Cretaceous turbidite play leads on Blocks 8 and 9 have indicative combined un-risked P50 recoverable prospective resources of 1875 MMbbls with a range of 945 (P90) to 3043 (P10) MMbbls1. The Competent Persons Report in its entirety reflects the independent consultants view.

APCL has already commenced 3D Seismic survey over 5000km², which is being conducted by TGS Nopec. APCL has also engaged a fully integrated geological team from Senergy (GB) Limited to support APCL in completing a full geological model for Blocks 8 and 9, which will include the interpretation of 3D seismic data and the identification and ranking of potential drill targets.

Under the terms of the Agreement, Global will acquire up to 100% (and no less than 95%) of APCL by issuing APCL shareholders 906,250,050 fully paid ordinary shares in the Company ('Consideration Shares'), subject to a number of conditions being satisfied including the successful completion of due diligence, the receipt of Global shareholder approval in relation to the Acquisition and the Company successfully completing a capital raising of at least A$130m and up to A$230m. The Consideration Shares will be escrowed in accordance with the ASX Listing Rules requirements (subject to any waiver obtained by the Company in relation to those requirements).

The capital raising will be undertaken by way of a placement of shares at A$0.55 per share to raise up to A$230 million ('Placement'). The Placement will also be subject to Global shareholder approval.

Following completion of the Acquisition and assuming a capital raising of A$230 million, Global will have 1,342,556,870 shares on issue and have a market capitalisation of approximately A$738 million (assuming a share price of A$0.55).

On completion of the Acquisition, the Company will hold 100% of the interest and rights associated with Blocks 8 and 9. These blocks cover an area of approximately 7,200 km2 off the coast of Liberia in West Africa, as shown in Annexure A. Blocks 8 and 9 were acquired from the National Oil Company of Liberia in 2004 as a part of an international bidding round. APCL and its subsidiaries have exclusive exploration authorisation over Blocks 8 and 9. In addition to Blocks 8 and 9, APCL is actively pursuing the acquisition of additional offshore licence blocks in West Africa. Applications have already been made in Sierra Leone and Liberia.

Global Executive Chairman, Mr Tony Sage said 'to have entered into an agreement to acquire a company that has such highly prospective oil and gas exploration assets, together with the potential to raise up to A$230 million to fund the advanced exploration and potential development of these assets puts the Company in an excellent position to potentially deliver significant value to shareholders'.

As a part of the Acquisition, the highly experienced executive team of APCL have agreed to fulfil key management positions within Global, including overseeing the exploration and development activities at Blocks 8 and 9.

The Board and management appointments will include Mr Frank Timis as Executive Chairman, Mr Mark Ashurst as Chief Financial Officer, Mr Karl Thompson as Chief Operating Officer, Mr Gibril Bangura as Non Executive Director, Mr Alan Watling as Non Executive Director and Mr Anthony Wilson as Non Executive Director. Mr Carlos Guzman and Dr Berend Van Hoorn will remain as Technical Consultants.

Mr Tony Sage will become Deputy Chairman and Mr Timothy Turner will remain as a Non Executive Director of Global, with current Director Mr Roberto Catena to step down upon completion of the Acquisition. Please refer to Annexure B for further details of the experience of the proposed Board and management of Global.

Blocks 8 & 9 background and evaluation
Both Blocks 8 and 9 represent attractive unexplored acreage offshore Liberia in an area that is receiving significant industry interest following the large discovery in the Jubilee Field to the East, in Ghana as well as to the West in the form of the significant Venus discovery offshore Sierra Leone.

Blocks 8 and 9 cover approximately 7,200 km2 with licences extending from the shallow inner shelf to the deep offshore region, covering depths of 200-3500m.

Previous exploration drilling took place from 1970 to 1972 and 1984 to 1985 between water depths of 100m and 470m. Six of the seven wells drilled on the shelf and upper slope encountered oil shows indicating a working petroleum system.

Specialist independent oil and gas consultant, IHS Global Limited has determined:
(i) indicative un-risked combined P50 recoverable prospective oil resources of 1875 MMbbls with a range of 945 (P90) to 3043 (P10) MMbbls are estimated in the Upper Cretaceous section; and
(ii) in the lower Cretaceous section, there is a potential for combined un-risked total P50 recoverable prospective resources of 915 MMbbls with a range of 505 (P90) to 1405 (P10) MMbbls.

Other potential leads have also been identified in both the upper and lower Cretaceous sections.

APCL has already commenced a 5,100 km2 3D seismic survey to reinterpret and improve structural mapping while reducing risk play. APCL is actively pursuing the acquisition of additional offshore licence blocks in West Africa. Applications have already been made in Sierra Leone and Liberia.

As the Acquisition is subject to shareholder approval and recompliance with Chapters 1 and 2 of the ASX Listing Rules, the Company is currently preparing a Notice of Meeting (which will include an Independent Expert's Report), scheduled to be despatched to shareholders in the coming weeks and a prospectus in respect of the proposed capital raising.

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