CAMAC Energy Inc. (ticker: CAK) is a U.S. based oil and gas company engaged in the exploration of offshore oil and gas leases in deep water Nigeria. The Company was founded in 2005 and has offices in Houston, Texas, Nairobi, Kenya, Banjul, Gambia and Lagos, Nigeria.
CAMAC Energy Inc. announced two major company milestones on November 20, 2013. CAK has agreed to purchase the remaining economic interests that it does not currently own in Oil Mining Leases (OML) 120 and 121, including the Oyo Field, for $270 million. The assets were acquired from Allied Energy Plc, its wholly owned subsidiary. CAMAC will issue 497,454,857 shares of common stock, issue a $50 million convertible subordinated note and pay $170 million cash for the exchange. Following this transaction, CAMAC will hold a 100% economic interest in the OML 120 and 121 and will be the technical operator.
In addition, CAMAC has reached an agreement to list its common stock on the Johannesburg Stock Exchange (JSE). The company will receive US$270 million equity investment through a private placement of 376,884,422 shares of common stock. In exchange, the Public Investment Corporation (PIC) Limited of South Africa will receive an approximate 30% ownership interest in the Company. JSE, whose headquarters is in South Africa, is the largest stock exchange in Africa. CAK currently has approximately 157 million shares listed on the NYSE Market, as of November 21, 2013; OAG360 notes that the company made no announcement regarding any changes to its US listing. An undisclosed portion of the JSE equity investment will be used to finance the Oyo field purchase. CAK will be required to declare a dividend equal to approximately 1.435 shares per share outstanding.
Pro forma for the listings and agreements, CAMAC’s subsidiaries, including Allied Energy, will hold 56.97% of CAK ownership. The PIC will hold 30% and existing shareholders will account for 13.03%.
Investing Heavily in the Oyo Field
CAK confirmed three intervals of Miocene hydrocarbons in its Oyo-7 well in an announcement on November 18, 2013. Logging while drilling data revealed the discovery in OML 120 – the first time the formation has been found in the area. The Miocene is the most prolific producing zone offshore Nigeria and Shell’s (ticker: RDS.B) Bonga field has produced 450 MMBO since the area was brought online in 2005.
Current production from the 120 and 121 blocks is roughly 2 MBOPD. The company anticipates completing both the Oyo-7 and Oyo-8 wells by mid-2014 and expects to produce 14 MBOPD purely from the Pliocene, with 7 MBOPD per well.
In a conference call on November 18, 2013, management said additional capital expenditures and guidance will be provided once the two wells are completed. The Oyo-9 is spud but its future plans have not been directly addressed. The company wants to mitigate risk and it is actively searching for a financial partner to join in its deepwater projects.
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