San Leon/Midwestern Talks End, No Deal

Irish independent San Leon Energy has decided not to buy shares in Midwestern Leon Petroleum (MLP), seven months after the owner of MLP, Midwestern Oil & Gas, first raised the idea.

San Leon shares have now resumed trading, it said April 23. The merger would have been a reverse takeover under AIM rules, so shares were suspended for the entire seven-month period.

The company said that, while it would have benefited from a larger indirect ownership of the Nigerian licence OML 18, it decided the merger did not "provide a sufficient balance of added value for San Leon shareholders and certainty of near-term cash flow."

San Leon said despite the failure to reach an agreement, it "continues to have a good relationship with Midwestern" and looks forward to working with it, as its partner, and jointly advancing production at OML 18. It has now received $58.6mn in quarterly payments from MLP, and since its shares were suspended in November 2017, two months after merger talks surfaced in the press, it has settled its dispute with Avobone at a cost of €11.53mn ($14.13mn) and repaid material outstanding liabilities.

CEO Oisin Fanning (below) said the company's financial position was much stronger than when discussions with Midwestern started and San Leon is now on a solid financial footing with a cash balance of $13.5mn and all material problems with creditors and litigation dealt with. "I am therefore pleased to say that the company is progressing its capital reorganisation in order to allow shareholder distributions. I thank all shareholders, and in particular, our largest shareholder, Toscafund for their patience and support during this period."

At the start of this year, San Leon announced that a Chinese suitor had ended talks on a potential takeover of the company.  But San Leon benefited a little when larger Irish explorer Providence Resources announced late last month it had agreed to farm out a stake in the undeveloped Barryroe Field, offshore Ireland, to a Chinese consortium; that's because San Leon has a 4.5% net profit interest on the field.