19th Feb 2016 16:57
LONDON (Alliance News) - MX Oil PLC late Friday said the sale of its Nigerian investment is still ongoing, but said it is still subject to a formal contract being signed.
MX Oil sourced a buyer for its interest in the Aje field in Nigeria back earlier this month as it signed a term sheet with a potential, but unnamed, buyer. The oil and gas company received a formal offer relating to the field in January and believes selling its investment will be more attractive to its shareholders than raising equity to fund its investment to first oil.
However, on Friday, MX Oil warned there is still no guarantee the deal will be completed despite due diligence and definitive legal documentation being at an "advanced stage".
"The transaction is, however, still subject to contract and the completion of due diligence and therefore there can be no guarantee that a transaction will be completed. The company expects to make a further announcement on this shortly," it said.
The unnamed buyer is part of an "established international oil and gas group". Under the terms of the deal, it potentially would pay MX Oil USD18.0 million in several stages for its investment in the Aje field.
MX Oil invested in an indirect, non-operated, 5% revenue interest in the OML 113 licence which covers the Aje field offshore Nigeria only back in July last year.
In addition, MX Oil Friday said it has raised an additional GBP600,000 through an additional subscription of loan notes, primarily to fund its Nigerian investment and to progress the compentent persons report work in relation to its assets in Mexico.
The loan notes pay a coupon of 12% per year and are convertible into MX Oil shares at 1.25 pence each before February 28. The total balance of MX Oil's loan notes now stands at GBP1.9 million.
MX Oil shares closed up 2.5% to 1.28 pence per share on Friday.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
MXO.L