13th Jul 2015 07:20
LONDON (Alliance News) - MX Oil PLC Monday said it has agreed to invest in an indirect, non-operated, 5% revenue interest in the OML 113 licence offshore Nigeria where production is expected by January 2016.
The licence includes the Aje Field, a "substantial development stage project with proven, flow tested discoveries", said the company.
The Aje field is targeting initial peak production of around 11,000 barrels of oil per day during first phase development, rising to 19,000 barrels of oil per day once a second phase development is completed.
The deal was signed with Jacka Resources Ltd, an Australian Securities Exchange-listed company.
"Aje, as an investment, ticks all the boxes: compelling economics in the current low oil price environment; a defined development plan in place targeting near term production; considerable exploration upside; located in a prolific hydrocarbon jurisdiction close to existing infrastructure; and acquired at a highly attractive price," said Chief Executive Stefan Olivier.
Jacka acquired the licence for USD16 million in 2011 and has subsequently invested a further AUD11 million into the project to date. That debt will be transferred to MX Oil for USD3 million, via the issuance of 43.4 million new MX Oil shares at 4.5 pence per share and the assignment of rights to invest into the asset holding company to fund the development to first oil.
That right was acquired from Jacka by Cornhill Asset Management and an associated investor and MX Oil will make certain conditional payments to Cornhill in order to benefit from any future cash flow from the license.
The first payment to be made by MX Oil will be for USD800,000 to Cornhill and will be paid once the next production well has been drilled on the Aje field. Once commercial production begins at the field, MX Oil will pay Cornhill a further USD1 million.
"This investment right enables MX Oil to continue to fund the asset holding company in place of Jacka, which, if funded in full to commercial oil production, would result in MX Oil having the economic benefit of Jacka's interest in OML 113," said the company.
Separately, MX Oil has also issued 133.3 million new shares at the same 4.5 pence price to raise GBP6.0 million to fund future capital expenditure and investment related to the deal and its other projects.
MX Oil intends to raise additional funds prior to first oil and for Phase two and a further Phase three development. The additional capital expenditure for Phase one is expected to be financed by way of a non-dilutive debt facility. The company is in advanced discussions with regard to such a facility and will announce details of this once secured.
"This is a game-changing acquisition for MX Oil. It accelerates our transformation into a highly cash generative oil and gas investment company, and it provides a platform from which to fund the development of the conventional onshore concessions we are looking to secure in Mexico as part of the on-going Bid Round 1 licensing round," said Olivier.
MX Oil shares were down 1.6% to 4.43 pence per share on Monday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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