News: Armour Energy signs binding US$130M farm-in with American Energy Partners

Armour Energy (ASX:AJQ) has signed a binding agreement with American Energy Partners (AEP) for a US$130 million (A$184 million) farm-in agreement for its unconventional oil and gas acreage in the McArthur Basin, Northern Territory.

AEP will spend this amount, which is up from the original US$100 million, over a maximum of five years to earn a 75% working interest.

The company will also receive a US$13 million cash payment – up from US$10 million – and have access to up to US$130 million of debt funding for Phase Two appraisal and development.

AEP will also take a 9.9% interest in Armour through a $6.74 million placement of 33.7 million shares at $0.20 per share.

Armour could also receive additional cash payments of up to US$23 million.

Based on cash at 30 June 2015 of A$8.5m, and after payments set out above, Armour’s pro-forma cash position would be A$48 million.

The agreement covers 29.3 million acres of its land holding in the McArthur Basin.

Armour will retain 100% ownership of all of its tenements in northwest Queensland covering 5.1 million acres.