Business
Potential farm out of 20% of Kraken to Delek
Potential farm out of 20% of Kraken to Delek.
About this update from Enquest Plc
[{"type":"text","content":"\n \nRNS Number : 4221E EnQuest PLC 18 July 2016 \n\n \n \nEnQuest PLC, 18 July 2016\nPotential farm out of 20% of Kraken to Delek\n \nEnQuest PLC (\"EnQuest\") is pleased to announce that it is holding discussions with Delek Group Ltd (\"Delek\") for the sale by EnQuest to one of Delek's subsidiaries of an interest in the Kraken development (\"Kraken\"). EnQuest confirms that EnQuest and Delek have signed a non-binding memorandum of understanding and are working towards executing binding transaction documents. Delek is today releasing information concerning this negotiation as part of its disclosure obligations with regard to a separate transaction.\n \nThe key terms of the proposal are currently as follows:\n \n\n\n\n\n-\n\n\nEnQuest to farm out to Delek a 20% working interest in Kraken.\n \n\n\n\n\n-\n\n\nDelek would bear its share in the project capex from January 1, 2016. \n \n\n\n\n\n-\n\n\nAt completion, Delek will advance USD20 million to the Seller for a period of up to 5 years at an annual interest of 3% which shall be returned to Delek in the event that its costs are not covered by revenues within 5 years from the completion date. \n \n\n\n\n\n-\n\n\nThe parties are discussing mechanisms for additional contingent consideration, to be set out in binding transaction documents.\n \n\n\n\n\n-\n\n\nThe parties may, prior to completion, by agreement and subject to requisite third party consents (including that of EnQuest's lenders), convert the transaction such that Delek may acquire a subsidiary of EnQuest which holds a 20% working interest in Kraken.\n\n\n\n\n \nThere is no guarantee that a final agreement will be reached. EnQuest announced previously that in addition to its ongoing cost reduction initiatives, it was also pursuing a range of further opportunities for debt reduction, including potential asset sales and farm outs. The transaction is subject to EnQuest's lending banks' consent. EnQuest continues to closely monitor and manage its funding and liquidity position in light of the current market environment and is engaging as appropriate with its credit facility providers (including banks and bondholders) in this regard.\n \nNote that if Delek and EnQuest agree and sign binding transaction documents, completion of the transact...