16th Dec 2015 09:37
LONDON (Alliance News) - MX Oil PLC and Northcote Energy Ltd both saw their shares rise on Wednesday after MX Oil secured four out of the five concessions it applied for under the landmark licensing round held in Mexico.
MX Oil shares were trading up 11% to 2.31 pence per share on Wednesday morning whilst Nortcote shares were up 9.6% to 0.0685p.
MX Oil applied for five of the 25 onshore land contract areas that were available under the licensing round, which was significant as it signalled the re-opening of Mexico's energy sector to foreign companies after 76 years of a state monopoly.
MX Oil is working with its partner Geo Estratos in the country, where it has now secured four concessions in the Veracruz region. Those concessions are Tecolutla, Ponton, La Laja and Paso de Oro.
Northcote released its own statement noting the awards as it has a participation agreement with MX Oil to participate in any concessions or other projects MX Oil is involved in Mexico with a 20% interest.
Northcote said once MX Oil has formally informed the company it has been awarded the concessions, it will have 20 days to decide whether or not to participate. Should Northcote elect to participate in the concessions, it will have to pay its share of costs to develop the projects.
Importantly, Northcote also holds 38.8 million warrants over MX Oil shares which could only be converted once MX Oil had acquired an oil and gas asset in Mexico. Of those warrants, 30.0 million can be exercised at 2.0p per share.
The remaining 8.8 million warrants can be exercised at 3.0p per share, but also have additional provisions before they can be exercised. Split into three equal tranches of just over 2.9 million warrants each, Northcote can exercise the first tranche once MX Oil's share price averages over 6.0p over a 60 day period, the second tranche once the average share price exceeds 12.0p over a 60 day period and the last tranche when shares average 18.0p.
The other concessions awarded under the licensing round to other companies lie in the states of Chiapas, Nuevo Leon, Tabasco and Tamaulipas.
The size of the potential resources within the areas acquired is unknown, but back in May MX Oil said it was targeting up to 100.0 million barrels of oil equivalent.
MX Oil Chief Executive Stefan Olivier said: "We are delighted with this outcome after two years of hard work in Mexico with our partner Geo Estratos. We undertook significant work in our assessment of these blocks and we are thrilled to have been successful in acquiring all our primary targets in an area that our team understands very well. These blocks, given their proximity to each other, provide logistical synergies and cost savings that further enhance the project economics of any single block."
"We believe that the reserves in these blocks are potentially far larger than initially assumed, and we expect to confirm this by commissioning a competent persons report in the near term. We believe these concessions will be transformational for MX Oil and we look forward to releasing further information regarding these assets in due course," he added.
By Joshua Warner; [email protected]; @JoshAlliance
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