TIDMSIA
RNS Number : 3302S
Soco International PLC
25 June 2018
SOCO International plc
("SOCO" or the "Company" or, together with its subsidiaries, the
"Group")
SALE OF CONGO (BRAZZAVILLE) INTERESTS
SOCO is pleased to announce that it has signed and completed a
sale and purchase agreement (the SPA) with Coastal Energy Congo
Limited (Coastal Energy), to sell its entire shareholding in SOCO
Congo Limited (SOCO Congo), which holds the Group's interests in
Congo (Brazzaville), for a cash consideration of up to US$10
million and an overriding royalty on future oil and condensate
production sold from those interests.
Ed Story, President and Chief Executive Officer, commented:
"I am delighted that the agreement for the sale of SOCO's Congo
(Brazzaville) interests has been signed. In January 2018, the
Company announced that its assets in Africa were no longer a core
strategic priority, and this is a step that will deliver an exit
from a material portion of the non-core African business. The
Company continues to focus on creating value from the core Vietnam
portfolio and on evaluating acquisition opportunities in a
disciplined manner to grow and refocus our business in line with
the strategy that we have outlined to the market."
Overview of SOCO Congo and Principal Terms of the
Transaction
The interests held indirectly by SOCO Congo comprise a 40.39%
operated interest in each of the Lidongo, Viodo, Lideka and Loubana
exploitation permits within the former Marine XI Block, located in
shallow water offshore Congo (Brazzaville). The sale of the
shareholding in SOCO Congo took effect immediately following
signature of the SPA, for a cash consideration of up to US$10
million and an overriding royalty interest of up to US$1 per barrel
on all future gross production of oil and condensate sold from any
of the four exploitation permits.
The cash consideration of up to US$10 million payable under the
SPA is structured as follows:
-- US$1 million within 10 business days on the later to occur of:
i. agreement or expert determination of a statement of net
assets or liabilities of SOCO Congo and its subsidiary as at 30
June 2018 (the 30 June Statement); and
ii. execution of the first agreement relating to the bonus
payable in respect of any of the four exploitation permits;
-- US$5 million within 10 business days of formal approval of
the first development plan on any of the exploitation permits;
and
-- US$4 million within 20 business days on the earlier to occur of:
i. first commercial production of oil or condensate from any of the exploitation permits; and
ii. 31 December 2019.
Each element of the cash consideration is subject to potential
adjustment by reference to the 30 June Statement. In addition, SOCO
will retain the right to an overriding royalty interest on all
barrels of oil or condensate produced and sold from any of the four
exploitation permits. The royalty payable on each barrel of oil or
condensate produced and sold will be determined by reference to the
prevailing price of North Sea Dated Brent (the Benchmark Price), as
summarised below:
-- US$0.50 on each barrel where the Benchmark Price is at or under $52.25 per barrel; or
-- US$1.00 on each barrel where the Benchmark Price is over $52.25 per barrel.
Financial Impact
The value of the gross assets of the Congo (Brazzaville) assets
held on the balance sheet as at 31 December 2017 was zero. The
assets in the Congo (Brazzaville) are not yet developed and have
generated no revenue from hydrocarbons to date.
For the 12 months ended 31 December 2017, the Congo
(Brazzaville) interests generated a loss before taxation of
approximately US$104 million, predominantly comprising an
impairment charge announced in January 2018 which reduced the
carrying value of the assets to zero. The transaction is expected
to have a limited impact on the Group's Income Statement in the
near term.
SOCO plans to use the sale proceeds and the potential future
royalty revenue from the exploitation permits to provide funds to
invest in the Company's growth plans and to support the commitment
to paying an annual dividend. It is anticipated that SOCO's
Director of Africa, Serge Lescaut, will be retained by Coastal
Energy in a similar role.
About Coastal Energy
Coastal Energy Congo is a subsidiary of Coastal Energy Holding
Ltd. The group develops proven offshore oil reserves in West
Africa. It is specialised in using early production systems
(FPSO/MOPU/FSO) for staged field developments. The group is
privately owned by Norwegian shareholders.
ENQUIRIES:
SOCO International plc Tel: 020 7747 2000
Ed Story, President and Chief Executive Officer
Jann Brown, Managing Director and Chief Financial Officer
Mike Watts, Managing Director
Sharan Dhami, Group Investor Relations Manager
Camarco Tel: 020 3757 4980
Billy Clegg
Georgia Edmonds
Owen Roberts
NOTES TO EDITORS
SOCO is an international oil and gas exploration and production
company, headquartered in London and listed on the London Stock
Exchange. The Company has field development and production
interests in Vietnam and an exploration interest in Angola.
SOCO holds a 30.5% working interest in the Te Giac Trang Field
of Block 16-1, which is operated by the Hoang Long Joint Operating
Company. Block 16-1 is located in the shallow water Cuu Long Basin,
offshore southern Vietnam.
SOCO holds a 25% working interest in the Ca Ngu Vang field of
Block 9-2, which is operated by the Hoan Vu Joint Operating
Company. Block 9-2 is located in the shallow water Cuu Long Basin,
offshore southern Vietnam.
SOCO holds a 22% interest in the Production Sharing Agreement
for the Cabinda North Block onshore the Angolan enclave of
Cabinda.
This information is provided by RNS, the news service of the
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contact rns@lseg.com or visit www.rns.com.
END
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