San Leon Updates on Nigeria Deal, European Plans
AIM-listed explorer San Leon is seeking to raise a minimum of $200mn by selling new equity at £1.05/share.
It said on May 16 that the proceeds will be used to finalise acquisition of an indirect 9.72% interest in OML 18, an onshore, producing oilfield in the southern Niger Delta in Nigeria covering 1,035 km2 that was formerly operated by Royal Dutch Shell.
The new shares are priced at a 261% premium to San Leon’s £0.29 share price when suspended on January 22 this year, as the company expects that “significant cash flows are expected to be generated from OML 18.”
In March 2015, Eroton acquired a 45% interest in OML 18 from Shell, Total and Eni for some $1.1bn and became operator. The remaining 55% interest in OML 18 is held by state Nigeria National Petroleum Company (NNPC). Arrangements between NNPC and Eroton are governed by a joint venture agreement.
San Leon said, under Eroton’s operatorship, the production on the field has risen from 10,000 b/d to some 50,000 b/d today plus more than 50mn ft3/d gas. Under development plans now under discussion, San Leon says the intention is to produce more than 100,000 b/d.
Oisin Fanning, San Leon’s CEO, said he was “very grateful for the patience of shareholders” during the period since its shares were suspended almost four months ago. “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 look forward to providing a further update to our shareholders shortly."
On March 22, San Leon paid funds that assured it of a 4.05% indirect equity in OML 18. The $200mn now sought will help increase that stake to 9.72% and provide some spare for development.
San Leon, which once said it had the largest shale acreage of any independent in Europe, now says it will relinquish “a number of Polish early-stage exploration licences” but retain “the majority of the company’s core Polish portfolio of appraisal and development, as well as shale appraisal”. It has also decided to exit its interests in Romania.
Mark Smedley