San Leon Sells Polish Assets

San Leon Energy agreed November 17 the sale of its interests in two Polish onshore assets, principally the Rawicz and Siekierki fields in the Permian Basin, to Colorado US-based Palomar Natural Resources, it said in a stock exchange announcement.

It sold its 35% stake in the Rawicz gas field for a cash consideration of $9mn, and the release of certain San Leon liabilities, including a loan of about $3mn to Palomar as a temporary carry of the drilling and testing costs of the Rawicz-12 and Rawicz-15 wells.

It sold its 35% stake in the Poznan assets (largely the Siekierki field) for a consideration of €1 plus a 10% net profit interest, which removes any further cost exposure to San Leon, while providing an interest in any future profits made by Palomar on the Poznan assets.

The first $2.2mn will be payable on closing, the next $2.3mn by November 30 and the remaining $4.5mn is due to paid to San Leon on or before October 1, 2017.  An interest charge of Libor plus 5% will be applied to any sum not paid by February 1 2017.

The current book value of the assets being disposed of is about €12.1mn ($12.8mn). Losses attributable to the assets in the last financial year were €0.

San Leon CEO Oisin Fanning

(Credit: San Leon)

CEO Oisin Fanning said that the sale was a "natural further step in focusing the company’s financial and management resources on the world-class OML 18 asset in Nigeria.  The sale price achieved is very similar to the carrying value of those assets in the latest audited financial statement, after the liabilities release is applied, and is considered by the Board to be full and fair.  It also reduces overheads costs through a downsizing of the Polish office, and no further licence fees or overheads on the assets sold.”

Two months ago San Leon declared that seven of its Polish [onshore] licences or licence applications had been “relinquished, or were in the advanced stages of relinquishment”. It retains a few Polish shale interests but San Leon's latest downsizing echoes what larger companies have done since interest in Poland's shale prospects peaked five years ago. Since then major companies such Exxon, ConocoPhillips, Marathon and Total have relinquished or sold interests; the only sizeable investor in the sector PGNiG is considering whether to end its investment in shale gas exploration. 

William Powell