San Leon Energy Steps into Turkey
San Leon Energy has announced an acquisition that will see the emerging explorer enter into Turkey.
The company has entered into a conditional agreement to acquire 75 percent of the issued share capital of Alpay Enerji AS from Server Fatih Alpay for consideration of $4 million USD.
Alpay is a Turkish oil and gas company which currently holds a 100 percent participating interest in seven conventional oil and gas licences in Turkey with gross proved and probable gas reserves of 46.6 BCF (8 MMBOE).
San Leon believes that additional gross proved and probable contingent gas resources of 140.7 BCF (24.3 MMBOE) can be unlocked with a low-risk drilling programme.
The proposed acquistion is subject, amongst other things, to obtaining the necessary regulatory approvals from the General Directorate of Petroleum Affairs in Turkey for the transfer to Alpay of nine additional conventional oil and gas licences in Turkey currently held by ARAR Petrol Ve Gaz Arama Uretim Pazarlama AS, a company controlled by Server Fatih Alpay.
Following the transfer, Alpay will hold a 100 percent participating interest in sixteen licences in Turkey, making it the second largest private acreage holder in the country of which San Leon will hold an indirect 75 per cent.
San Leon estimates that production from the Existing Licences and the Additional Licences can be increased from approximately 250 MCFD and 60 BOPD to 10 MMCFD and 100 BOPD by the end of Q1 2014 which would generate monthly revenue of approximately $3 million USD. The Company further estimates a large upside from the Existing Licences of 440 BCF on a proved plus probable plus possible reserves and contingent resources basis.
Following completion of the acquisition, Server Fatih Alpay will retain a 20 percent shareholding in Alpay. The balance of 5 percent will be retained (subject to any sale) by Niche Group plc.
San Leon also announced a share placement intended to raise £31 million (gross) by way of a placing to be carried out in two tranches.
Oisin Fanning, Executive Chairman of San Leon Energy, commented:
“The acquisition of Alpay Energy is an important milestone for San Leon, bringing both proven reserves and immediate cash flow which are directly accretive to the business. The Company intends to use capital from this fund raising to bring to market rapidly stable production of 10 MMCFD and 120 BOPD in Turkey, with continued near term investment focused on developing the significant 2P and Contingent reserves already discovered. In addition, the extensive land position we are acquiring through the transaction gives the Company access to significant exploration upside in proven play fairways.
The cash flow generated from the near-term development of Alpay Energy’s assets is expected to make San Leon cash flow positive across the Company’s entire portfolio of assets by Q2 2014 and to deliver significant cash flow by Q4 2014. This will allow the Company’s longer term projects with huge upside, in Poland and Morocco, to develop while negating the need to come back to the market for further funding.”