Ivanhoe Energy Surges after Asset Sale to Royal Dutch Shell
Shares of Ivanhoe Energy (NASDAQ: IVAN) surged over 40% in Wednesday's pre-market session after the company sold its interest in a Chinese gas project for $160 million.
Ivanhoe Energy announced its wholly owned subsidiary, Sunwing Zitong Energy, has signed a binding Memorandum of Understanding to sell 100% of its participating interest in the Production Sharing Contract for the Zitong block in China's Sichuan Basin to Shell China Exploration and Production, a subsidiary of Royal Dutch Shell (NYSE: RDS.A). The transaction is subject to government approvals and other prescribed conditions.
In exchange for SZE's interest in the Zitong block, Ivanhoe will receive a payment of up to US$85 million as reimbursement for past qualified and recoverable costs incurred. In addition, Ivanhoe will receive a further payment upon closing of up to US$75 million , contingent on the timing of the receipt of full government approvals and third-party consents and waivers for the transaction.
SZE and Shell expect to sign the definitive Purchase and Sale Agreement associated with the proposed transaction before the start of Chinese New Year celebrations on January 23, 2012 , and after Shell completes its confirmatory due diligence.
Currently, shares of Ivanhoe Energy have rebounded, trading just 6% higher at $1.21.
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