10th Jun 2014 07:58
LONDON (Alliance News) - President Energy PLC Tuesday said it has increased its interest in Paraguay's Pirity concession to 64% from 59% through the acquisition of LCH SA for shares and cash.
The oil and gas company said it will issue 10.2 million shares at 35 pence per share plus USD250,000 in cash to buy LCH, which holds a 5% interest in the Pirity concession.
President Energy currently holds a 59% beneficial working interest in the Pirity concession, but once the acquisition completes it will hold 64% through its group of companies.
The company noted that the 5% interest held by LCH is being carried by Pirity Hidrocarburos, President's partner in the site, as part of a 2012 deal before President first bought interest in the concession.
Pirity Hydrocarburos has already agreed to pay LCH upon starting to drill its first exploration well on the site. President Energy said that this will be used to pay the cash consideration of its LCH acquisition.
The company also said that in the event of a commercial discovery at the concession, it will provide a further deferred consideration of USD5 million in shares and warrants over USD2.5 million in shares.
President Energy added that once LCH's minimum work obligations, which include seismic studies and total drilling of 15,000 metres in vertical depth, are complete at the Pirity Concession, it becomes responsible for its share of joint venture expenses and capital costs.
The company added that LCH has the right to a 5% working interest in the nearby Demattei concession. If this right is granted, LCH shareholders will be entitled to receive USD4 million in President shares.
"I am pleased that we have been able to increase President's interest in the significant potential of the Pirity rift basin. We have made this acquisition without incurring any additional capital cost for the exploration campaign which will commence shortly, with the first well spudding in a few days," Executive Chairman Peter Levine said in a statement.
President Energy shares were up 3.0% at 34.00 pence early Tuesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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