16th May 2016 06:57
LONDON (Alliance News) - San Leon Energy PLC Monday said it aims to raise at least USD200.0 million through a share placing priced at a significant premium in order to fund the acquisition of an indirect interest in a producing oilfield in Nigeria.
The oil and gas firm said it aims to raise the funds from a placing priced at 105.0 pence per share, which is a huge premium to the current share price of 29.12 pence - but San Leon shares have been suspended since early 2016.
That price suggests around 190.5 million shares would need to be issued by San Leon in order to raise that minimum target. San Leon currently has 61.8 million shares in issue, meaning those new shares would represent around 75.5% of the company's enlarged issued share capital.
San Leon said the placing will be used to complete the acquisition of an indirect interest in OML 18, an onshore field that is already producing oil and formerly operated by oil major Royal Dutch Shell PLC.
The company said it expects to generate "significant cashflows" from the field, and said it plans to adopt a "formal shareholder distribution policy" going forward.
San Leon originally struck a deal back in January to secure a 9.72% indirect economic interest in OML 18, which benefits from having a "significant proportion" of its oil hedged at USD95 per barrel until December 2017 - with Brent trading at only USD48 per barrel on Monday morning.
San Leon said the field is currently producing 50,000 barrels of oil per day after rising from only 10,000 barrels a day back in March 2015, and there is also gas production of around 50.0 million standard cubic feet per day at present.
The current plan is to get the field producing over 100,000 barrels of oil per day.
The acquisition is part of the a three-part deal, the first of which was completed in March through the finalisation of the Mart Resources acquisition.
"This is a complex transaction, and we are committed to getting it right, both in terms of structure and also in its implications for shareholder value. I am pleased to confirm that production in OML 18 has continued to be strong and this is a function of the operational controls and expertise that have been implemented by Eroton, the operator of the asset, as well as the implementation of the first stages of the field redevelopment plan. I look forward to providing a further update to our shareholders shortly," said Executive Chairman Oisin Fanning.
By Joshua Warner; [email protected]; @JoshAlliance
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