3rd Sep 2015 07:16
LONDON (Alliance News) - Mosman Oil and Gas Ltd shares rose on Thursday after it said it has signed a conditional deal to acquire a stake in producing onshore gas licences in New Zealand for around GBP4.2 million through a joint venture deal.
Mosman shares were up 21% to 3.34 pence per share on Thursday morning.
The company said it has signed a conditional sale and purchase agreement to acquire the project, which currently has several revenue streams through the production of oil, condensate, gas, liquefied petroleum gas and electricity.
The company said the project would be renamed the South Taranaki energy project, which will be based on the Manutahi field in the country. The deal includes the acquisition of the Rimu production station, which is located in Mokoia in the Manawapou catchment of the country.
The project underwent a major refurbishment in 2014, and since it restarted in October 2014, it has been producing around 603 barrels of oil equivalent per day, which would generate annual revenue of approximately NZD8.0 million based on current production rates, oil price and exchange rates.
Mosman will become the operator of the licence under a joint development agreement to develop the project's resource of 1.9 billion cubic feet of gas in proved and probable reserves and 13.7 billion cubic feet of contingent resources.
The company said it has also identified "12 low cost projects" that could potentially increase production at an estimated cost of NZD2.6 million. Those new projects would not require any further drilling and Mosman is to consider those extra projects "in due course".
The NZD10.0 million, or GBP4.2 million will be paid in two tranches, the first of which will be for NZD7.0 million once the deal is completed and the remaining NZD3.0 million will be paid six months later. Mosman has already paid a 5% deposit.
The company said however, that the total amount it will pay for the deal is subject to the "final percentage ownership" it will hold as it is acquiring the project through a joint venture.
"Mosman's intention is to own at least 40% and no more than 70% of the project and is actively considering further offers from potential joint venture partners," it said. "Mosman has received a number of expressions of interest from other companies seeking to participate in the acquisition."
"Mosman intends to finance its share of the acquisition through a combination of existing cash, sale of a royalty on future production, debt, equity, and convertible securities," it said.
By Joshua Warner; [email protected]; @JoshAlliance
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