DENVER, May 13, 2013 /PRNewswire/ -- Magellan
Petroleum Corporation ("Magellan" or the "Company") (NASDAQ: MPET)
today announced that on May 10, 2013,
the Company entered into a Series A Convertible Preferred Stock
Purchase Agreement (the "Series A Purchase Agreement") with One
Stone Holdings II LP ("One Stone"),
an affiliate of One Stone Energy Partners LP, a New York based private equity firm focused on
investments in the oil and gas industry.
Pursuant to the terms of the Series A Purchase Agreement, upon
the fulfillment of certain customary closing conditions, Magellan
will issue and sell to One Stone
19,239,734 shares of Series A Convertible Preferred Stock ("Series
A Preferred Stock") for aggregate cash proceeds of $23,501,216. Subject to certain conditions,
including stockholder approval to the extent required by NASDAQ,
each share of Series A Preferred Stock will be convertible into one
share of Magellan's Common Stock at an initial conversion price of
$1.22 per share, representing a 20%
premium to the volume-weighted average closing price per share of
Common Stock for the ten trading days preceding the signing of the
Series A Purchase Agreement. Furthermore, the Company will
pay no capital raising advisory fees or issue any warrants in
relation to this transaction. The Company and One Stone anticipate that the closing of the
transactions contemplated by the Series A Purchase Agreement will
occur on or before May 22, 2013.
The Company intends to use the proceeds of this transaction, in
addition to the Company's $15 million
in cash and equivalents at March 31,
2013, to fund (i) the $10.0 to $20.0
million necessary for the drilling, completion, and
execution of a CO2-enhanced oil recovery
("CO2-EOR") pilot project at Poplar, including the
purchase of necessary CO2 volumes; (ii) the current cash
flow loss from operations of approximately $1.0 million per month until the ramp up of gas
sales from the Company's onshore Australian assets in calendar year
2014; and (iii) the Company's efforts to further establish the
value of its United Kingdom
acreage through the participation in one or more exploratory wells
in calendar year 2014.
J. Thomas Wilson, President and
CEO of Magellan, stated, "This transaction is a critical milestone
in the path to delivering value to our shareholders. The
proceeds from this transaction are expected to place the Company on
a sound financial footing with sufficient liquid resources to
progress the development of the Company's assets over the next two
years. We consider One Stone's
investment, and the premium they are willing to pay to our current
share price, to be a vote of confidence in our assets and strategy,
and we are excited to welcome One
Stone into our shareholder base as a financial and strategic
partner. We firmly believe that this transaction represents the
most appropriate path to increasing net asset value per
share."
Bob Israel, Managing Member of
One Stone, stated, "One Stone's focus is on identifying
"underdeveloped assets" in the natural resources sector. We
believe that the asset portfolio held by Magellan is an excellent
opportunity to combine One Stone's
capital with high potential, underdeveloped assets. In
particular, the Poplar CO2-EOR project fits perfectly
with our strategy. We have great confidence in the management
and look forward to working with the Board of Directors of Magellan
to increase the value of the Company for all shareholders."
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy the securities described herein,
nor shall there be any sale of such securities in any jurisdiction
in which such offer, solicitation, or sale would be unlawful prior
the registration or qualification under the securities laws of any
such jurisdiction.
The securities described herein have not been registered under
the U.S. Securities Act of 1933, as amended, or any state
securities laws, and may not be offered or sold in the United States absent registration with the
U.S. Securities and Exchange Commission (the "SEC") or an
applicable exemption from such registration requirements. The
Series A Purchase Agreement provides for a registration rights
agreement to be executed upon closing, pursuant to which the
Company will agree to file one or more registration statements with
the SEC covering the resale of the shares of common stock issuable
upon conversion of or in connection with the Series A Preferred
Stock.
The Company is reporting further details about the Series A
Purchase Agreement in a Current Report on Form 8-K to be filed with
the SEC on or about May 13,
2013. This Form 8-K will be available on the Company's
website at www.magellanpetroleum.com.
CAUTIONARY INFORMATION ABOUT FORWARD LOOKING
STATEMENTS
Statements in this press release that are not historical in
nature are intended to be, and are hereby identified as,
forward-looking statements for purposes of the Private Securities
Litigation Reform Act of 1995. The words "believe," "expect,"
"intend," "will," and similar expressions are intended to identify
forward looking statements. These statements about Magellan
may relate to its businesses, prospects, and other matters that
involve a number of risks and uncertainties that may cause actual
results to differ materially from the results expressed or implied
in the forward-looking statements. Among these risks and
uncertainties are: (i) risks regarding the completion of the Series
A Purchase Agreement, subsequent shareholder approval as specified
in the Series A Purchase Agreement, and whether the Company will
realize the expected benefits from the Series A Purchase Agreement;
(ii) whether CO2-EOR initiatives and other drilling at
the Company's properties in the Poplar field in Montana will result in increased production
and cash generation and/or will otherwise successfully assist in
the development of Poplar; (iii) fluctuations in oil and gas
prices; and (iv) other risks and uncertainties set forth in the
"Risk Factors" sections of the Company's Annual Report on Form 10-K
for the fiscal year ended June 30,
2012, and subsequent Quarterly Reports on Form 10-Q filed
with the SEC. Forward looking statements in this press
release speak only as of the date hereof, and the Company
undertakes no obligation to update or revise such statements except
as required by securities laws.
ABOUT MAGELLAN
Magellan is an independent energy company engaged in the
exploration, development, production, and sale of crude oil and
natural gas from currently held assets in the United States, Australia, and the United Kingdom.
Traded on NASDAQ since 1972, the Company conducts its operations
through two wholly owned subsidiaries, Nautilus Poplar LLC, which
owns interests at Poplar, a highly attractive oil field in the
Williston Basin, and Magellan Petroleum Australia, a successful
independent oil and gas company in Australia and the UK in existence since
1964. The Company's mission is to enhance shareholder value
by maximizing the full potential of existing assets. Magellan
routinely posts important information about the Company on its
website at www.magellanpetroleum.com.
ABOUT ONE-STONE
One Stone Energy Partners LP is a private equity fund based in
New York. The fund is focused on investments in natural
resources, primarily oil and gas. One
Stone's geographic areas of interest include North and
South America, Europe and West
Africa.
The principals of the fund have over 130 years of cumulative
experience investing in, operating, and advising energy-related
businesses. One Stone has a unique group of limited partners,
the majority of whom are industry insiders.
Robert Israel and Vadim Gluzman are the managing members of One
Stone Energy Partners.
For further information, please contact:
Matthew Ciardiello, Manager,
Investor Relations at 720.484.2404
SOURCE Magellan Petroleum Corporation