Saffron Moves on Strategy with Italian Assets: Update
(Adds details of subscription, para. 3)
UK small independent Saffron Energy has bought Italian oil and gas reserves from Australian Po Valley and fellow UK-listed Sound Energy in two planned reverse takeovers, on terms agreed in October 2017. It is pursuing a new strategy focusing on low-cost gas in Italy and southeast Asia near high value, growing markets, it said January 22.
The Sound transaction will be a cash purchase but financed through a share issue, 185,907,500 new ordinary shares of £0.001 each being given to Sound shareholders pro rata to their holdings. The Po Valley shares will be exchanged for 200mn Saffron shares.
In order to fund the enlarged entity, and meet the placing conditions, Saffron issued the same day new equity to institutional and other qualified investors, raising up to £14mn ($19.5mn). It said "the fundraising will include a £6mn subscription by the company's new cornerstone investor, CIP Merchant Capital."
Subject to shareholder approvals, Saffron, which is being renamed Coro once its shares are trading once more, said it will become "the owner and operator of a significant portfolio of production and development assets in Italy with a strong board with substantial experience and expertise in the sector, coupled with a demonstrable track record of delivering value for shareholders."
The combined Italian portfolio will contain total proved and probable reserves of about 43.7bn ft³ and contingent gas resources of 44.6bn ft³ and total contingent oil resources of 2.4mn barrels.
The assets include the Selva onshore gas field, which recently reported strong gas flows resulting from successful flow testing of the Podere Maiar 1dir exploration well which confirmed a net pay of 41 metres from two identified gas reservoirs, the Teodorico offshore Adriatic gasfield (47bn ft³) development and the large Torre del Moro and Santa Maria Gorretti and Dalla gas exploration licences, plus two smaller gas production fields.
Saffron says southeast Asia possesses some of the world's fastest developing economies where demand for gas significantly outstrips supply. This, combined with increasing growth across the region and the increasing shortage of gas in the major markets, provides a compelling investment proposition for investors at this specific point in the cycle, it said, and so it is planning to buy a series of assets across the region, starting in Indonesia.