San Leon Admits Chinese Takeover Slow, Not Guaranteed

AIM-listed San Leon Energy has acknowledged a hold-up over a Chinese takeover offer, while reporting a steep increase in 1H losses.

The company once held the largest European shale gas exploration acreage of any independents, but more recently shifted its focus to Nigeria.

San Leon in June 2017 announced a takeover had been received from China Great United Petroleum, conditional on the latter completing due diligence.

Now on September 29, San Leon said that China Great “has remained in a dialogue with the company and has advised that the delay in its due diligence has been due to it now being in discussions to bring in a large EPC partner to add value in midstream projects on [Nigeria block] OML 18. China Great will update the Company regarding progress in due course. There can be no certainty that any of these discussions will lead to a firm intention to make an offer.” 

San Leon said that it first received “an approach from a possible offeror” back in December 2016, meaning the process has now taken nine months.

On the plus side, San Leon said that it has received $20.6mn to date in relation to its $174.5mn loan notes, and that it is due to be repaid some $19mn per quarter from Q4 2017

San Leon’s total loss for 1H2017 was €14.4mn, compared with a loss of €2.6mn in the year prior period, although it also made a loss of €10.7mn in 2H 2016 as well.

Ten days ago it announced the exit from all but two of its remaining Polish shale gas exploration licences.

Mark Smedley