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Mediterranean Oil & Gas plc (LSE:MOG) agreed to sell nine onshore gas producing assets and four exploration interests in Italy in a move to dispose non-core assets and concentrate on other opportunities, the company disclosed today.
According to the Board’s decision, the divested assets were no longer strategic for the growth of the company’s future gas production.
Total gas production from the disposed assets only represent 6% of the firm’s revenue, or equivalent to 13,8000 cubic metre per day and 2P reserves to be given up were pegged at 1.4 billion cubic feet, or 7.5% of MOG’s 18.4 bcf.
“The divestment of these non-core assets is consistent with our stated strategy to grow the Company by investing in exploration, development and production opportunities that can add material resources and reserves to the Company’s portfolio,” MOG’s Chief Executive, Dr. Bill Higgs, commented on the deal.
He added: “Completion of the Transaction will also free up our team to focus on the value-adding opportunities that remain within our portfolio.”
MOG is left with seven gas producing concessions with varying working interests, three exploration permits, and five applications all in onshore Italy.
A sale and purchase agreement was signed by MOG’s subsidiary with Canoel International Energy Limited, a Toronto Venture Exchange – quoted firm transferring the assets for a price of just €100, a clear indication of the assets being a liability.
The company, instead will also give Canoel €1.25 million as partial contribution in future plug, abandonment, and site remediation costs for the disposed assets and surrender whatever revenue earned from the assets since 24th August 2012 up to the date of completion of the sale, net of operating costs and capital expenditures incurred by the company.
Shares were down 1.1% to 11.50 pence by 11:00 AM, following the announcement.
Company Spotlight
Mediterranean Oil & Gas plc is a UK-incorporated oil and gas company primarily focussed on exploration and production activities in Italy, Malta, and France.
