San Leon Nearer End of Nigeria Deal
AIM-listed San Leon may know in a month if shareholders back its complex arrangement to secure a 9.72% indirect stake in Nigerian onshore block OML 18, for which it has been arranging finance since early 2016 and which may balance out its heavy exposure to European shale gas exploration.
The Ireland-based firm said August 26 it has “conditionally raised” £170.3mn ($221.4 mn) through the issue of 378.4mn new ordinary shares at a placing price of £0.45/share with institutional and other investors. Net proceeds are being used to complete its deal to secure the indirect 9.72% stake.
The £0.45 price represents a 54.5% premium to the last traded price of £0.29125 on January 21, 2016 when San Leon shares were suspended in order to arrange the placing. It has been led by ToscaFund, a 39.64% shareholder in San Leon, which could end up with 54.41% in the enlarged company.
The Placing and the OML 18 Production Arrangement are conditional on passing various resolutions, which are being put to shareholders at an extraordinary general meeting (EGM) in Dublin on September 20, 2016. Notice of the EGM together with documentation about the arrangement are being sent to shareholders on August 26, the company said.
Four EGM resolutions already have irrevocable majority support from shareholders, San Leon said. However, a fifth resolution allowing it a waiver to grant Toscafund special rights to participate in the placing lacked majority support from non-Toscafund shareholders as of August 26.
OML 18 is 45% owned by two Nigerian oil and gas companies, Eroton and Sahara; and 55% by state Nigerian National Petroleum Corp. The complex arrangement has involved San Leon acquiring Mart Resources, which has a relationship with indigenous firm Midwestern, which in turn has a 50% equity and initial 90% economic interest in operator Eroton. Some of the funds are to be used to refinance Midwestern's debt.
Production at OML 18 reached 50,000 b/d oil and 50mn ft³/d in April 2016 and San Leon says that development plans under discussion foresee it reaching 115,000 b/d and 485mn ft³/d by 2020.
San Leon ordinary shares resumed trading on August 26 and just after 10am local time were £0.506, three-quarters more than their January 21 close, but still below their year-ago level of £0.6175.
Mark Smedley