Proposed Sale of Cambay PSC 50% WI to Selan Exploration
Synergia Energy Limited (AIM: SYN) has announced it has entered into a Heads of Terms (HoT) agreement with Selan Exploration Technology Limited (“Selan”) for the proposed sale of its remaining 50% working interest in the Cambay Production Sharing Contract (PSC), located onshore in India.
This follows the farm-out agreement signed in February 2024, under which Selan acquired a 50% stake in the Cambay PSC in exchange for covering the costs of an agreed work programme. The transaction closed on 1 August 2024 following Government of India (GoI) approval, and the joint venture is currently preparing to drill its first new well.
After conducting a strategic review, Synergia’s Board has determined that a full divestment of its remaining interest in Cambay is in the best interest of shareholders. The proposed consideration — US$14 million — represents six times the Company’s current market capitalisation.
Transaction Terms:
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US$0.5 million upfront upon execution of the HoT
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US$6.5 million payable upon GoI approval of the interest transfer
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US$7.0 million final payment due 12 months after GoI approval
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All payments are subject to applicable taxes
Selan has been granted a 180-day exclusivity period to finalise a Sale and Purchase Agreement (SPA) and seek the necessary GoI approvals. The transaction will also require shareholder approval under Rule 15 of the AIM Rules for Companies. A circular and notice of General Meeting will be published once the SPA is completed.
While the transaction is underway, operations at Cambay are expected to continue as planned. Meanwhile, Synergia is reviewing its cost base and forward strategy, and the Board intends to return a portion of the proceeds to shareholders upon completion. Full details of the revised strategy and return plans will be outlined in the upcoming shareholder circular.
Synergia’s Chief Executive Officer, Roland Wessel, said:
“Following a detailed strategic review and given the persistent gap between our net asset value and market capitalisation, the Board has determined that divesting our remaining Cambay interest represents the most effective way to unlock value for shareholders.
The terms agreed with Selan reflect a compelling valuation relative to our current market cap and will provide the resources to return capital to shareholders while supporting the advancement of new strategic initiatives.”
