AUSTRALIAN onshore oil and gas explorer Armour Energy has paid down a note facility and shored up its bank account through a divestment and funds from a farm-in agreement with Santos.

Armour Energy chief Brad Lingo told shareholders the company would pay A$5.3 million in early principal amortization payments and expected the ASX-listed business to receive $10 million through asset transactions by the end of this month.

"The company is delivering on the equity raise target and will shortly receive the $10 million in asset transactions," Lingo said. 

It will receive $4 million through the sale of its interest in production license PL1084. Armour had a 10% stake in the CSG license known as the "Murrungamba Block" and announced it was selling it to Australia Pacific LNG earlier this year. 

A further $6 million is expected to be received this month from Santos - which is farming-in to six permits in the South Nicholson Basin. 

Under the agreement Santos will make a one-off cash payment of A$6 million and then carry the junior partner for around $65 million worth of exploration costs. 

With a significant amount of cash to hit the bank accounts in the short-term, Armour said it could justify paying debt further. By paying down the further $5.3 million in payments, Armour had now paid back nearly $10 million in debt over the last six months. 

This leaves the company with about $45 million in outstanding secured amortising notes. 

It also closed its entitlement offer, which it launched last month, raising a total of $2.19 million from existing shareholders. 

The remaining funds from the capital raise, and the transactions, will be used to fund work programs over the remainder of the year. 

Source: Energy News Bulletin