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Global Energy Ventures Ltd.

09/13/2017 | Press release | Distributed by Public on 09/12/2017 17:42

GEV Marine CNG Technology Acquisition & Capital Raising 13-Sep-17

ASX Announcement 13 September 2017

HIGHLIGHTS:

GLOBAL ENERGY VENTURES LTD

ENTERS INTO BINDING AGREEMENTS TO ACQUIRE SEA NG CORPORATION

  • Global Energy Ventures Ltd (ASX: GEV, or the Company) has executed binding agreements to acquire 100% of Sea NG Corporation (SeaNG), a Calgary based compressed natural gas (CNG) marine transport technology company, and associated CNG intellectual property (IP) rights (together the SeaNG Transaction).

  • The acquisition of SeaNG's marine transport technology marks a milestone that underpins GEV's vision to participate across the full gas delivery value chain (i.e., across gas reserves, gas treatment/compression, loading facilities, CNG ships, unloading facilities, and bankable long term Gas offtake contracts).

  • The SeaNG Transaction delivers ownership of a global IP portfolio of marine CNG transport solutions, project opportunities and technical capability to fast track the Port Meridian CNG project (Atlantic CNG Project) as well as other GEV projects under consideration.

  • SeaNG's proprietary CNG marine transport solution is a low capital cost means of delivering bulk volumes of natural gas to markets, that are otherwise uneconomic for traditional pipelines or liquefied natural gas (LNG) projects.

  • SeaNG's Coselle® System is a proven and commercially competitive technology which was developed over 15 years, including receiving American Bureau of Shipping (ABS) classification society Full Class Design Approval sufficient for construction drawings to be prepared and issued (together Full Approval).

  • GEV is set to promote SeaNG Optimum, the next generation of marine CNG transport ship design, which GEV considers is a 'game changer' in the volume of gas that can be stored on a ship, drastically reducing comparative shipping costs relative to traditional marine CNG technologies.

  • ABS has already issued "Approval in Principle" for SeaNG's Optimum 200 MMscf CNG ship, advising that they saw no aspects of the design that would prevent it from achieving Full Approval, planned for mid 2018.

  • Consideration for the SeaNG Transaction will include (subject to ASX approval being obtained in relation to the structure of the consideration of the acquisition):

    • US$0.585 million paid in cash;

    • The issue of 11,440,000 ordinary shares in GEV; and

    • The issue of 56,350,000 Performance Shares, with conversion based on certain future milestone events.

  • Initial discussions are already underway with owners of identified gas resources located in the Atlantic suitable for the transport of CNG to the Atlantic CNG Project (Port Meridian).

  • Foster Stockbroking Pty Ltd has been appointed as lead manager for a maximum A$4.0 million capital raising to be undertaken in conjunction with the SeaNG Transaction. Firm commitments have been received for A$4.0 million at the proposed issue price of A$0.17, including the participation by Directors subject to shareholder approvals. Maurice Brand (Chairman and CEO)

has committed to take up A$340,000 in the capital raising. The capital raising is not underwritten. The minimum subscription amount has been set at A$4.0 million.

  • The SeaNG Transaction is targeted for completion on or before 31 December 2017.

  • GEV intends to sell its existing US oil and gas exploration assets by 31 December 2017. GEV has disposed of its 18.5% ownership of prospect EP455 for a nominal consideration to AWE Limited. The sale of the Company's 18.5% stake will be effective as of 1 January 2017, resulting in GEV being free from any Joint Venture liabilities post 31 December 2016.

Global Energy Ventures Ltd (www.gev.com) is pleased to advise that it has executed a legally binding agreement (the Acquisition Agreement) pursuant to which it expects to acquire 100% of SeaNG (including common shares, preferred shares, and debentures).

The SeaNG Transaction will underpin GEV's vision of being a leading developer of global CNG projects. SeaNG is a Calgary based company, formed in 2005, focused on the development and implementation of marine CNG transportation projects using its proprietary Coselle® System for ship design and transport of CNG. SeaNG is recognised as a world leader in marine CNG who has previously been supported by globally recognised shipping, energy and infrastructure companies as joint venture partners and shareholders, including Marubeni Corporation, Teekay Corporation and Enbridge Inc., each of which will become GEV shareholders via the issuance of GEV shares under the Acquisition Agreement.

In addition to the Acquisition Agreement, GEV has also executed an Intellectual Property Purchase Agreement (IPP Agreement) with the principal inventors (Rights Holders) of the SeaNG Coselle® CNG System (including David Stenning) and the principal inventor of the SeaNG Optimum technology (John Fitzpatrick). Both David Stenning and John Fitzpatrick will join the GEV group following the completion of the SeaNG Transaction and in the interim, with a funding commitment from GEV, John Fitzpatrick has lodged a Patent Application (on 3 August 2017) for SeaNG Optimum, commencing the process to obtain ABS Full Approval for construction. Such approval is scheduled to be obtained in mid 2018, which is in line with GEV's target of achieving financial close on its first CNG Project by 31 December 2018. ABS has already provided "Approval in Principle" for SeaNG's Optimum 200 MMscf CNG ship and ABS found no aspects of the design that would prevent it from achieving Full Approval. It is GEV's intention to also seek ABS Approval in Principle for larger CNG ships sizes, possibly 450 MMscf and 800 MMscf, by 31 December 2018

David Stenning and John Fitzpatrick will lead the development of a CNG Technology Centre of Excellence headquartered in Calgary. As a reflection of their confidence in GEV's ability to achieve financial close on a CNG project, GEV has agreed to use reasonable endeavours to award John Fitzpatrick and David Stenning the naming rights to the first three CNG Ships built using SeaNG Optimum technology.

GEV does not envisage a material increase in administration costs to maintain the Calgary office, as Corporate Strategy, Business Development and Project Finance activities of the Company will continue to be conducted through the Perth office and other locations in line with market development.

Importantly for GEV, the SeaNG Transaction will accelerate the development of the Company's recently announced Atlantic CNG Project, with plans to transport CNG to the Port Meridian import terminal located in the UK which is backed by a 20 year gas sale rights of up to 300 MMscf/d to Uniper Global Commodities SE (~2.3 mtpa of LNG equivalent). Initial discussions are already underway with owners of identified gas resources located in the Atlantic suitable for the transport of CNG to Port Meridian. Those discussions will now include SeaNG Optimum as an integrated supply solution for the Atlantic CNG Project.

GEV Chairman & CEO Maurice Brand, said: "In recent months the Company has completed its detailed due diligence of commercially viable marine CNG technologies, including the assessment of various patents, engineering, CNG transport economics, ABS shipping approvals and overall construction readiness. The acquisition of SeaNG is an outstanding opportunity for GEV to take ownership of one of the leading CNG technologies in the sector.

We consider that the recent advancements of SeaNG Optimum, which already has ABS Approval in Principle for a 200 MMscf ship capacity with an ABS finding that "we (ABS) find no aspects of the design that would prevent it from achieving full approval", is the 'game changer' that the GEV Directors have been seeking. Whilst the SeaNG Coselle® technology has been both technically and commercially competitive with all other available CNG marine technologies, it is clearly evident from Figure 1 below that SeaNG Optimum will materially reduce both capital and operating costs and improve the probability of success for GEV.

Together with the Directors strong track record in mid-stream energy development projects, the combination of GEV and SeaNG's IP and technical teams will be transformational for the global CNG opportunities we have identified."

We are also pleased that David and John will join the GEV group, as both have been at the forefront of the CNG industry for over 20 years and have a wealth of experience to immediately bring to GEV. We expect to make additional technical team appointments as the engineering requirements ramp up over the next 12 months."

FIGURE 1: SeaNG's marine CNG Coselle® Low Density technology v High Density SeaNG Optimum technology - an obvious 'game changer' for CNG marine transportation

  1. Change of Activities

    • ASX has determined that as a result of the proposed SeaNG Transaction, the Company will be required, pursuant to Listing Rule 11.1.2, to obtain approval from GEV's shareholders at a general meeting. The Company will also be required, pursuant to Listing Rule 11.1.3, to re- comply with Chapters 1 and 2 of the Listing Rules due to the SeaNG Transaction triggering a Change of Nature.

    • There will be no requirement for a consolidation of the Company's securities.

  2. Capital Raising

    • To assist the Company to re-comply with Chapters 1 & 2 of the ASX Listing Rules (Listing Rules) and support the SeaNG Transaction costs, the Company plans, subject to the approval of the Company's shareholders, to conduct a capital raising under a prospectus to raise A$4.0 million through the issue of fully paid ordinary shares in the capital of the Company (Shares) at a proposed price of A$0.17 cents/share.

    • Foster Stockbroking Pty Ltd has been appointed as lead manager for a maximum A$4.0 million capital raising to be undertaken in conjunction with the SeaNG Transaction. Firm commitments have been received for A$4.0 million at the proposed issue price of A$0.17, including the participation by Directors subject to shareholder approvals. Maurice Brand (Chairman and CEO) has committed to take up A$340,000 in the capital raising. The capital raising is not underwritten. The minimum subscription amount has been set at A$4.0 million.

  3. SeaNG Transaction - Terms and Conditions

    • Pursuant to the Acquisition Agreement and the IPP Agreement, GEV has agreed to acquire the following interests as at the Effective Date, defined as the date on which the conditions precedent under the Acquisition Agreement are satisfied or waived:

      • 100% of SeaNG's common shares;

      • 100% of SeaNG's preferred shares;

      • 100% of the outstanding debentures of SeaNG; and

      • All Intellectual Property (IP) rights.

    • Subject to ASX approval being obtained in relation to the structure of the consideration of the Acquisition, in consideration for GEV acquiring such interests, GEV shall make the following cash payments and issue the following GEV Shares and Performance Shares:

    • Consideration as at Effective Date

      • 5,720,000 fully paid ordinary shares in the capital of GEV to SeaNG's "Common Shareholders";

      • 5,720,000 fully paid ordinary shares in the capital of GEV to SeaNG's "Debenture Holders" plus US$0.585 million in cash (the cash consideration is subject to a possible downward working capital adjustment as at Effective Date); and

      • 56,350,000 performance shares issued to the Debenture Holders; Common Shareholders; Preferred Shareholders and Rights Holders as tabled below.

SeaNG Performance Shares

IPP Performance Shares

Conditions

Debenture Holders

Common Shareholders

Preferred Shareholders

Rights Holders

Milestone A

2.72

2.72

0.56

1.85

Milestone B

3.17

3.17

0.66

2.20

Milestone C

3.40

3.40

0.70

2.35

Milestone D

9.06

9.06

1.88

6.25

Milestone E

3.20

Total 1)

18.35

18.35

3.80

15.85

Note 1. All figures are in millions of Performance Shares