Australia's AXP Energy sells US oil, gas assets

AXP Energy, a Sydney-listed oil and gas company, has signed a binding letter agreement with privately-owned Mountain V to sell 100% of its oil and gas assets located in the US for $4mn, it announced on September 29.

The assets are spread over Tennessee, Eastern Kentucky, Virginia and the Illinois basin (western Kentucky, Illinois and Indiana assets), AXP’s Illinois and Appalachian basin projects.

Mountain V is a privately held US oil and gas exploration and production company operating in the Appalachian basin since 1994.

The consideration will be paid in four installments: a prepayment of $500,000 upon execution of the binding letter agreement, a prepayment of $500,000 upon execution of a full form purchase and sale agreement but not later than October 30, 2023, a prepayment of $1mn upon approval of the transaction by a vote of AXP shareholders on November 30, and the remaining $2mn subject to closing adjustments at closing.

Subject to all conditions being satisfied, closing shall occur on or before November 30, 2023, or such other date agreed by the parties in writing, the company said.

AXP believes the transaction will unlock significantly more value for shareholders than might otherwise be expected over the medium-term by continuing with the assets. AXP does not foresee gas prices rising to a level where the assets are attractive or commercial for the company and therefore considers disposal as being in the best move. 

Post completion of the transaction, the company will remain an oil and gas company with a focus on its Colorado project and additional acquisitions in the oil and gas sector.