Norwest finalises Joint Venture for Xanadu TP/15 Permit
Friday, Feb 10, 2017

  • Norwest Energy finalises farm-out of TP/15 Permit
  • Xanadu-1 drilling plans accelerated
  • Share placement to TP/15 Joint Venture Participant to raise A$500,000
  • Strategic relationship with 3C Group IC Limited

Norwest Energy NL ('Norwest') is delighted to announce it has entered agreements to achieve the full farm-out of its 160MMbbl 'Xanadu' TP/15 prospect.

Norwest has executed a binding term-sheet whereby 3C Group IC Limited, through two of its wholly-owned subsidiaries (‘3C Group’), a Group incorporated in Guernsey will contribute 40% of the well costs to earn a 30% interest in TP/15. In addition, 3C Group will also have the right to participate inother wells in all the northern Perth Basin permits Norwest holds interests in on equivalent terms as the TP/15 farm-out.

The finalisation of this farm-out is considered an outstanding achievement for Norwest in the current market, and represents a major milestone for Norwest shareholders. Securing this funding for drilling costs has been pivotal in ensuring plans to drill this long-awaited well are finally realised.

As announced on 23rd September 2016, Norwest has already entered binding term-sheets with Transerv Energy Ltd (‘Transerv’) and Triangle Energy (Global) Limited (‘Triangle’). Pursuant to these existing termsheets and the term-sheet now entered with 3C Group, Norwest will remain Operator of TP/15 and will retain a free-carried 25% interest in the Xanadu-1 well. Accordingly, the farm-out arrangements for the Xanadu-1 well are as follows:

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Following the Xanadu-1 well being drilled, each of the parties will contribute to additional expenditure in proportion to their interests in TP/15.

Share Placement and Issue of Options

In addition to funding 40% of the drilling costs of the Xanadu-1 well, 3C Group will subscribe for 208,333,333 fully paid ordinary shares in Norwest (‘New Shares’) at an issue price of A$0.0024 per New Share, raising approximately A$500,000 (‘Placement’). Norwest will also issue to 3C Group for no further cash consideration, a total of 60 million unlisted options to subscribe for new fully paid ordinary shares in Norwest (‘New Options’), at an exercise price calculated as the lesser of (1) A$0.0024 and (2) the price Norwest issues shares under the last placement completed before the options are exercised, and expiring on 10 February 2018.

The issue price of the New Shares and upper limit of the exercise price of the New Options has been calculated as 75% of the 15 day VWAP of Norwest’s shares1 and a 20% premium to the price of shares that were issued under the share placement completed by Norwest in August 2016.2

The New Shares and New Options will be issued using part of Norwest’s existing capacity under Listing Rule 7.1.

Once the New Shares are issued, 3C Group will hold 7.79% of all Norwest shares on issue. Assuming 3C Group exercises the New Options, together with the New Shares, 3C Group will hold 9.82% of all Norwest Shares on issue.

The funds raised by the Placement and any exercise of the New Options will assist Norwest in funding ongoing exploration activities required to progress its portfolio of assets. Norwest remains fully committed to participating in the drilling programs for Xanadu-1 in TP/15, Lockyer Deep-1 in EP368 and Arrowsmith-3 in EP413.

Norwest will issue an Appendix 3B and Cleansing Notice under section 708A of the Corporations Act in respect of the New Shares and New Options in due course.

Strategic Relationship with 3C Group

In addition to the New Shares and New Options to be issued to 3C Group, Norwest is delighted to advise it has established a strategic relationship with 3C Group, whereby 3C Group will provide ongoing technical, legal, risk, financial and networking assistance and advice to support Norwest’s TP/15 and other assets.

As part of this strategic relationship, Norwest will seek the necessary regulatory approvals and/or waivers to offer 3C Group the following rights:

a) where Norwest proposes to issue shares under a placement in the next 12 months, the right to take up to an additional 148.3m shares in Norwest at the lesser of $0.0024 per share and the price Norwest offers the shares to third parties, provided the issue of such shares will not increase 3C Group’s interest in Norwest beyond 9.9% on a fully diluted basis; and

b) where Norwest proposes to issue shares under a placement after the date of this announcement, the right to take up 9.9% of those shares at the same price Norwest offers them to third parties.

Neither the issue of the New Shares nor the issue of the New Options is conditional on Norwest receiving the necessary regulatory approvals and/or waivers.

Norwest CEO Shelley Robertson commented: “Norwest is incredibly pleased to welcome 3C Group to join us in the drilling of Xanadu-1. The funds raised from the placement will enable the Company to focus on ongoing exploration obligations, including the 3 well program across TP/15, EP368 and EP413. I am confident this partnership will develop over time into a valuable long-term relationship benefiting Norwest and all our shareholders. I look forward with great anticipation to the year ahead.”

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