15th Jun 2015 09:10
LONDON (Alliance News) - Argos Resources Ltd Monday said its administrative expenditure is "fully funded for the foreseeable future" in the wake of its farm-out deal with Noble Energy Falklands Ltd and Edison International SpA.
Managing Director John Hogan made the comments as the company reported a USD1.3 million net loss for 2014, compared with a USD1.8 million net loss in the prior year, the result of lower administrative expenses due to savings.
Noble and Edison are to drill an exploration well to test the company's Rhea prospect at no cost to the company under the farmout deal revealed in April. On completion of the deal, expected later in 2015, Noble is to become the operator of Licence PL001, which was one of the first licences to be awarded in the Falklands.
Argos Resources assigned its 100% working interest to the two companies, with Noble receiving 75% and Edison receiving the remainder, in return for 5% of the gross revenue from all oil and gas produced over the life of the licence. Noble and Edison also will pay to Argos Resources USD2.75 million on completion, on top of ongoing annual payments of USD0.8 million until first production.
Chairman Ian Thomson said the deal puts shareholders in a strong position amid the slump in the price of Brent crude oil since the middle of 2014.
"This innovative deal has removed any uncertainty over how the company would finance its share of appraisal and development costs in the case of success. Future capital calls on shareholders or material shareholder dilution is now unlikely to occur," Thomson said in a statement.
Argos Resources shares were flat at 9.75 pence on Monday.
By Samuel Agini; [email protected]; @samuelagini
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