A Calgary mining company is acquiring an Alaska North Slope oil explorer.
TVI Pacific Inc. plans to acquire the outstanding stock of TG World Energy Inc., the two companies announced Dec. 23. TG World is a Calgary-based independent exploring the North Slope as part of a joint venture led by Brooks Range Petroleum Corp. TVI is a Calgary-based mining company that shares a senior executive with TG World.
Through the acquisition, TVI would buy all outstanding TG World stock on the basis of two-thirds of a TVI common share for each TG common share. TVI would also buy 29.65 million TG common shares and invest more than $1.3 million in TG World through a convertible promissory note to help TG World “in financing its immediate obligations.”
TVI estimates the total value of the transaction at $13.5 million.
Once the transaction is completed, TVI shareholders would own 84.4 percent of the merged company, while TG World shareholders would own the remaining 15.6 percent.
TG World plans to hold a special shareholders meeting in February to vote on the deal.
Deal eyes Philippine assetsWhile the transaction includes Alaska assets, it’s not based around those assets.
Although TVI maintains an office in Calgary, its operations are focused on the Philippines. In March 2010, TG World added a Philippine oil prospect to its portfolio and has been updating investors on the project almost weekly since getting successful flow test results in June. TG World also holds property in Niger and on Alaska’s North Slope.
TVI and TG World, in a joint press release, said the deal would “allow TVI to leverage its extensive relationships in the Philippines by entering the Philippine oil and gas sector. This could provide TVI with access to a second cash flow stream that would help to offset TVI’s exposure to base and precious metals commodity pricing risk.”
In a prepared statement, TVI President and CEO Clifford James said, “TVI has a strategic need for an acquisition to expand its cash flow sources, but high commodity prices are making advanced acquisitions in the Philippines mining sector difficult to secure. This opportunity will also allow TVI to build scale and scope through an investment in an additional resource that is expected to help mitigate the risks associated with a single commodity.” James is also the president and CEO of TG World Energy.
Alaska drilling on trackThe deal would also benefit TG World, according Chairman Wayne Thomson.
In a statement, Thomson said “the Transaction will merge anticipated cash flow from the offshore Philippines wells (and possibly North Tarn, Alaska) with a corporation that will have the financial and technical capacity to move TG’s oil and gas projects forward.”
If the deal goes through, TG World would continue to be a working interest owner in the Alaska exploration program that BRPC is permitting for early 2011, according to Jim Winegarner, vice president of land for BRPC. “This will be a positive impact to our 2011 drilling program,” Winegarner told Petroleum News in an e-mail on Dec. 28. “TVI has the capacity to take advantage of the drilling opportunities BRPC has generated.”
TG World joined the multi-company joint venture led by operator BRPC in 2006, taking part in several active drilling seasons at prospects across the central North Slope.
In early 2010, after being disappointed with the results of the Sak River No. 1A exploration well in the Gwydyr Bay-area Beechey Point unit, TG World relinquished its interest in the Sak River and North Shore prospects and backed out of a future well, North Shore No. 3, a move allowed under its partnership agreement with BRPC.
More intrigued with North TarnWhile TG World retains some interest in Beechey Point, the company seems to be much more intrigued with North Tarn. The joint venture came into the prospect southwest of the Kuparuk River unit in early 2010 through a farm-in arrangement with Eni Petroleum.
The joint venture plans to drill at North Tarn in early 2011. TG World is responsible for 35.7 percent of the cost of the first well in return for 20 percent interest in the leases.
The transaction would not impact the existing joint venture agreement. “TG World Energy Inc. will remain a party in all of our JV agreements,” Winegarner said.
The joint venture is one of the most active explorers on the North Slope. In addition to North Tarn, the companies hold acreage at Beechey Point, Tofkat and Slugger.
TG World holds a 25 percent working interest in the Tofkat prospect, where the joint venture drilled an exploration well in 2008. Tofkat is due west of North Tarn, along the Colville River. TG World also holds a 25 percent working interest in the Slugger prospect, also known as the South Thomson prospect because of its location just south of the Point Thomson unit. The joint venture hopes to soon shoot seismic at Slugger.