Triangle to spin-out Asian energy assets into new ASX-listed vehicle

Triangle Energy has revealed plans to spin out the company’s Philippine assets and its wholly owned subsidiary Tetragon Energy, to create an Asian-focused oil and gas explorer to be listed on the ASX bourse.

The company’s plan, subject to the thumbs-up from ordinary Triangle shareholders at a soon-to-be convened extraordinary general meeting, will result in an in-specie distribution of Tetragon’s 19,700,100 ordinary shares to existing Triangle shareholders, expected to consist of about one Tetragon share for every 112 Triangle shares held. 

Tetragon currently houses the company’s Philippine assets, comprising interests in Petroleum Service Contracts SC-80, SC-81 and SC-82.

The company holds a 37.5 per cent interest in SC-80 and SC-81 in the Sulu Sea, in the southwestern area of the Philippines, containing a potentially massive 470 billion cubic feet of gas and five million barrels of condensate across two existing discoveries, with multi-trillion cubic feet of exploration upside according to management.

Both discoveries are reported as 2C Gross Resources, referring to a “best estimate” 50 per cent probability of the total resource being potentially recoverable; however, they are not considered commercial yet due to various uncertainties.

Tetragon also fully owns SC-82 in the Cagayan Basin on the island of Luzon, 250 kilometres from the nation’s capital of Manila.

Assuming the spin-out obtains the nod of approval from Triangle shareholders in addition to approval from the ASX’s gatekeepers, the company will stump up $1.5 million to arm Tetragon with a prospectus and potential success in an initial public offering (IPO).

Triangle is kicking in funds to give Tetragon every possible chance of securing ASX approval for its IPO.  As a potential new entrant to the bourse, it must demonstrate a sufficient capital structure and appropriate operations for possible future success.

The IPO aims to top up Tetragon’s war chest with at least $4 million in fresh cash, with the door left open to raise more if investor demand heats up, all priced at a tidy 20 cents a share.

If Tetragon succeeds in its application for admission to the ASX, Triangle says the sole focus of the newly-listed junior will be to progress and develop its Philippine oil and gas assets.

Triangle Energy managing director Conrad Todd said: “The proposed transaction will establish Tetragon as a stand-alone, Asian focused entity initially holding three permits in the Philippines with its own capital structure, investor base and dedicated management team, while allowing Triangle’s shareholders to retain direct exposure to the Philippine assets and future growth.”

Triangle’s board believes Tetragon will have a far better crack at success flying solo, with its own management team free to zero in on a tailored growth strategy. The split should also give the market a cleaner read on the true value of its energy assets, while letting both companies deploy capital and resources towards their principal business activities in a more efficient manner.

Existing Triangle shareholders will maintain a direct interest in Tetragon’s assets and benefit from any uplift in market valuation, while continuing to participate in Triangle Energy’s diverse oil and gas plays.

Paperwork relevant to the company spin-out is expected to be dispatched to Triangle shareholders in the coming days.

Triangle will retain its prospective Western Australian and UK oil and gas interests, including a 50 per cent interest in production and exploration licenses in the Perth Basin, as well as a 50 per cent interest in several UK assets. These include two licenses that comprise four blocks containing the Cragganmore gas field and nine blocks in the Outer Moray Firth in Scotland, which has become a focal point for offshore energy developments.

Triangle appears to be making a savvy move with this spin-out of Tetragon, potentially unlocking additional value in the Asian energy portfolio and enabling a greater focus on the company’s own coveted WA and UK assets.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au