Vanoil Energy Ltd.

Vanoil Energy Ltd.

March 15, 2013 14:21 ET

Offer to Acquire Avana Petroleum Limited by Vanoil Energy Ltd.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 15, 2013) - Vanoil Energy Ltd., ("Vanoil") (TSX VENTURE:VEL), a TSX-V-listed oil and gas company with a portfolio of assets in East Africa, is pleased to announce that Vanoil and its wholly-owned subsidiary, Vanoil Energy Holdings Ltd. (the "Offeror") has entered into a warranty and implementation agreement with the majority shareholders (being Exchange Minerals Limited, Carinia Holdings Limited and Mr. Sam Malin (the "Principal Shareholders")) of Avana Petroleum Limited ("Avana") and will today make an offer to acquire the entire issued share capital of Avana on the terms set out below (the "Offer").


  • All share transaction recommended by the independent board of directors of Avana and supported by Avana's CEO, Sam Malin, with irrevocable undertakings to accept the Offer from the Principal Shareholders, representing approximately 82 % of Avana's issued share capital.

  • The Principal Shareholders have undertaken to procure that the Offer is accepted by certain other shareholders of Avana to ensure that the Offeror has received valid acceptances in respect of at least 90% of Avana's issued share capital (the "Acceptance Condition"). Accordingly, it is expected that the Offer will become wholly unconditional later today.

  • Increases, at completion, Vanoil's net recoverable mean unrisked prospective resources from 927 million barrels of oil equivalent ("boe") to approximately two billion boe. The Company will file in short order a National Instrument 51-101 report on the Seychelles Asset and Kenyan Asset (as defined below), which will be available on SEDAR.

  • Brings geological and geopolitical diversification to the existing Vanoil portfolio with Avana's:

    • 25% participating interest in oil and gas exploration Areas A and B in the Seychelles ("Seychelles Asset"), alongside partner East African Exploration Seychelles Limited (a wholly owned subsidiary of Afren plc ("Afren")); and

    • anticipated receipt of a 10% participating interest in Kenya offshore Block L9 (the "Kenyan Asset"), alongside partner Dominion Petroleum Kenya Limited (a wholly owned subsidiary of Ophir Energy plc ("Ophir"))

  • Accelerates Vanoil's exploration program by facilitating the conduct of two 3D seismic surveys in 2013 and several drilling events in 2014, at the latest.

  • Sam Malin, the CEO and founder of Avana, to be appointed to Vanoil's Board of Directors.

Aaron D'Este commented: "The vision of Vanoil's Board of Directors is to provide a compelling and robust proposition for investors committed to oil exploration in East Africa. The proposed acquisition of Avana will accelerate Vanoil towards this goal. In a single transaction, Vanoil will potentially double its net recoverable mean unrisked prospective resources, reduce risk through diversification, and gain well-known and reputable joint venture partners with extensive experience across Africa. We are also delighted that Sam Malin has agreed to join the Board of Vanoil and pleased to note that the share-for-share nature of the deal preserves our cash position. We believe that the acquisition of Avana will prove to be a transformational event for Vanoil and its shareholders and we note that the anticipated US$27 million cash from our previously announced Fluormin acquisition will greatly assist with the rapid execution of work programs across our entire portfolio."

Sam Malin, CEO of Avana, commented: "The acquisition of Avana by Vanoil is a major step in growing a significant East African exploration company with prospective onshore and offshore acreage across several countries. I look forward to taking up my new position within Vanoil supporting the ongoing development of a well placed regional player and striving to deliver value to shareholders."

Benefits of the Offer

This transaction will bring geological and geopolitical diversification to the existing Vanoil portfolio, including acreage in Kenya subject to the anticipated receipt of the Kenyan Asset (subject to approval by the Government of Kenya) and a new geography for Vanoil, the Seychelles, with a 25% interest in Areas A and B. The enlarged group will, following the anticipated receipt of the Kenyan Asset, hold blocks in four separate basins, two onshore and two offshore.

Following the Offer, Vanoil's net recoverable mean unrisked prospective resources will increase from 927 million boe to approximately two billion boe, accelerating Vanoil's vision of becoming an emerging leader in oil and gas exploration in East Africa.

Vanoil's and Avana's shareholders will benefit through this further diversification and consequent de-risking of Vanoil's portfolio, by providing better access to financing, joint venture partners and in-country service providers.

The Offer

The Offer has been recommended by the independent board of directors of Avana and supported by Sam Malin. The Offeror will today post an offer document to all shareholders of Avana, pursuant to which the Offeror will offer to acquire the entire issued share capital of Avana for such consideration being:

  • the issue of a total of 12,500,000 common shares in Vanoil, with approximately 0.282 common shares in Vanoil being issued in exchange for each ordinary share held in the capital of Avana ("Avana Share");

  • the issue of a total of 5,000,000 Vanoil warrants, with approximately 0.112 warrants granted per Avana Share held, with each whole warrant entitling the holder to purchase one common share in Vanoil at an exercise price of CAD$1.00;

  • subject to the anticipated receipt by the enlarged group of the Kenyan Asset, the issue of a further 12,500,000 common shares in Vanoil, with approximately 0.282 common shares in Vanoil being issued in exchange for each Avana Share held;

  • subject to the operator of the Kenyan Asset spudding a second well on Block L9, having drilled a previous well which has encountered hydrocarbons, the payment of US$2 million in cash, equating to US$0.04515012 for each Avana Share held; and

  • subject to the operator of the Seychelles Asset spudding a second well on the Seychelles Asset, having drilled a previous well which has encountered hydrocarbons, the payment of US$2 million in cash, equating to US$0.04515012 for each Avana Share held.

Vanoil has agreed to guarantee the performance of the obligations of the Offeror as and when they become due in accordance with the terms of the Offer for the benefit of all shareholders of Avana and their respective successors, transferees and assigns. This guarantee remains in place irrespective of any intermediate payment or discharge in full or in part of any of the obligations by the Offeror. Exchange Minerals Limited has also agreed to defer the issue to it of certain common shares in Vanoil, in compliance with the requirements of the TSX-V.

The only condition to the Offer is the Acceptance Condition.

Subject to satisfaction of the Acceptance Condition, and notwithstanding that the Offer will remain open for acceptance, the Offeror intends to apply the provisions of Part X Chapter 3 of the Isle of Man Companies Act 2006, by issuing a Section 160(2) Notice to acquire compulsorily the remaining Avana Shares on the same terms as the Offer.

All securities issued pursuant to the Offer are subject to a 4 month hold period.

If you are a shareholder of Avana, once you have received and read the offer document and the accompanying form of acceptance, should you have any queries, please contact Cavendish Trust Company Limited on +44 (0) 1624 679000.

Any further announcements made in relation to the Offer, will be made by Vanoil on behalf of the Offeror and copies of such announcements will be available on the website of Vanoil at:

Block L9 - Kenya

Block L9 is a 5,065 square kilometres block located off the coast of Mombasa in the southern territorial waters of Kenya; a region in which all of the neighbouring acreage is held by Total, Anadarko, BG, Apache, PTT and their respective partners. Block L9 lies directly to the south of Block L8, on which Apache discovered gas in the Mbawa prospect earlier this year. The results of a 560 km2 3D seismic survey conducted in Q2 2012 suggest that the analogous Mbawa South prospect extends across the border of Block L8 into L9, and a second 1,536 km2 3D seismic survey conducted by Ophir in Q3 2012 illuminated potential oil prospects in a separate fairway spanning the southern half of Block L9 and notably the Simba Graben. Ophir management presentations in October 2012 note that the estimated gross recoverable mean unrisked prospective resources on Block L9 are 2.7bbbl/11.8 TCF of natural gas and that drilling will commence in 2013.


Areas A and B comprise in excess of 14,000 square kilometres in total and are located on the Seychelles plateau and adjacent zones in the northern waters of the Seychelles in a region where Amoco previously drilled three wells with hydrocarbon shows. Avana and its partner have acquired 8,500 square kilometres of 2D seismic in the Seychelles (in addition to over 4,000 square kilometres acquired by other parties over the blocks) and an extensive new 3D seismic survey is scheduled to commence in early 2013. Multiple oil seeps have been observed on Areas A and B, and tar balls of natural origin are abundant throughout the region. In August 2012, Afren's management noted that the estimated gross recoverable mean unrisked prospective resources on Areas A and B are 2.8 billion boe and that drilling is due to commence in Q4 2013.

About Vanoil Energy Ltd and the Offeror

Based in Vancouver, Canada, Vanoil is an internationally diversified resource company that has a portfolio of oil and gas assets in Kenya and rights to acquire further oil and gas assets in Rwanda. In Kenya, Blocks 3A and 3B were acquired in October 2007 through the signing of a Production Sharing Contract with the Government of the Republic of Kenya. Blocks 3A and 3B, which cover 24,912 square kilometres, are part of the vastly under-explored Cretaceous Central African Rift Basin System. Vanoil is preparing to drill in Q1 2013 its first exploration well on its Kenyan concession. Vanoil also has the exclusive right to negotiate a production sharing agreement with the Government of Rwanda in connection with a 1,631 square kilometres territory in the East Kivu Graben in Rwanda at the southern extension of the Albertine Graben where Heritage Oil plc and Tullow Oil plc made their historic discovery in neighbouring Uganda.

The Offeror is a company incorporated in the British Virgin Islands and is a wholly owned subsidiary of Vanoil.

On behalf of the Board of


Aaron D'Este, Chief Executive Officer

None of the US Securities and Exchange Commission, any US state securities commission or any other US regulatory authority has passed comment upon or endorsed the merits of the Offer or the accuracy, adequacy or completeness of this communication. Any representation to the contrary may be a criminal offence.

Disclaimer for Forward Looking Information

This news release includes forward looking statements that are subject to assumptions, risks and uncertainties. Statements in this news release which are not purely historical are forward looking statements, including without limitation any statements concerning Vanoil's and Avana's intentions, plans, estimates, beliefs or expectations regarding the future. Although Vanoil and Avana believe that any such intentions, plans, estimates, beliefs and expectations in this news release are reasonable, there can be no assurance that any such intentions, plans, beliefs and expectations will prove to be accurate.

Vanoil cautions readers that all forward looking statements, including without limitation those relating to Vanoil's and Avana's future operations and business prospects, are based on assumptions none of which can be assured, and are subject to certain risks and uncertainties that could cause actual events or results to differ materially from those indicated in the forward looking statements. Readers are advised to rely on their own evaluation of such risks and uncertainties and should not place undue reliance on forward looking statements.

Any forward looking statements are made as of the date of this news release, and both Vanoil and Avana assume no obligation to update the forward looking statements, or to update the reasons why actual events or results could or do differ from those projected in the forward looking statements.

Notice to US Shareholders

The Offer is being made for the securities of a company incorporated in the Isle of Man that does not have securities registered under Section 12 of the United States Securities Exchange Act of 1934, as amended (the "US Exchange Act"). Accordingly, the Offer is not subject to Section 14(d) of the US Exchange Act, or Regulation 14D promulgated by the U.S. Securities and Exchange Commission thereunder. The Offer is made in the United States with respect to securities of a "foreign private issuer", as such term is defined in Rule 3b-4 under the US Exchange Act, in accordance with the corporate and tender offer rules applicable to Isle of Man companies. Shareholders resident in the United States should be aware that such requirements are different from those of the United States applicable to tender offers under the US Exchange Act and the rules and regulations promulgated thereunder. Financial statements included and incorporated by reference herein have not been prepared in accordance with U.S. general accepted accounting principles.

The Vanoil securities as part of the consideration under the Offer have not been and will not be registered under the U.S. Securities Act (the "US Securities Act") and are being offered in the United States pursuant to the exemption from registration provided by Rule 802 thereunder. Securities issued to US shareholders in reliance on Rule 802 will be "restricted securities" within the meaning of Rule 144 under the US Securities Act to the same extent and proportion that that the securities exchanged by the holder in that transaction were restricted securities. Restricted securities may be offered, sold, pledged or otherwise transferred, directly or indirectly, in the United States only pursuant to an exemption or exclusion from the registration requirements of the US Securities Act and applicable state securities laws

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information