Coro Energy (CORO) announced on Friday it will not go through with its acquisition of a 42.5% interest in the Bulu PSC in offshore Indonesia, and will use the cash to focus on the Duyung PSC.
The Southeast Asian focused oil and gas company said the risks associated with the Bulu acquisition had increased, and allowed the Bulu Acquisition agreement to lalpse.
Regulatory approvals for Bulu were still outstanding and Coro said there were concerns around the future of the operating partner and potential changes to the Bulu partnership composition.
As a result, Coro Energy will no longer pay $6.94 million in cash, and will no longer be issuing $4 million worth of new Coro shares as consideration for the acquisition.
James Menzies, Coro's Chief Executive Officer, commented: "As we look to build our portfolio, we recognise the importance of being highly selective in identifying the right projects to pursue whilst also managing our funds in the best interests of shareholders.”
Shares in Coro Energy were trading flat at 1.575p on Friday.
Mr. Menzies added: “We are excited by the opportunities we see to build a business of scale in South East Asia, with a portfolio that would include both current production as well as both long- and near-term growth assets.”
He said: “With that in mind, the increased risks around the Bulu project have led us to terminate the transaction, allowing us, with 2020 shaping up to be a highly active M&A market in the region, to focus our resources on opportunities that can provide near-term impact on the Company and value to its shareholders."
In addition to the cash consideration and issue of shares, the acquisition would have seen Coro pay $1.04 in working capital adjustments to AWE Limited.
Coro Energy said it spend around $250,000 on the transaction.
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