TIDMSLE
RNS Number : 2336J
San Leon Energy PLC
28 March 2018
28 March 2018
San Leon Energy plc
("San Leon" or the "Company")
Barryroe Farm-Out Update Agreement
San Leon notes the announcement today from Providence Resources
Plc ("Providence") regarding the Barryroe Field, offshore Ireland,
in which San Leon holds a 4.5% Net Profit Interest. San Leon Energy
is not required to pay any further appraisal or development costs
on the Licence. The main text of Providence's announcement is set
out below for reference.
The Company wishes Providence a successful completion to the
farm-out.
Start of text from Providence's announcement:
-- PROVIDENCE & LANSDOWNE AGREE TO FARM-OUT A 50% WORKING
INTEREST IN BARRYROE TO A CHINESE CONSORTIUM ("THE CONSORTIUM") LED
BY APEC ENERGY ENTERPRISE LIMITED ("APEC")
-- THE CONSORTIUM TO FUND 100% OF DRILLING COSTS FOR 3 WELLS AND
ASSOCIATED SIDE-TRACKS
-- THE CONSORTIUM TO FINANCE PROVIDENCE & LANSDOWNE'S 50%
SHARE OF DRILLING PROGRAMME COSTS BY WAY OF A NON-RECOURSE LOAN
WHICH IS SECURED AGAINST FUTURE BARRYROE PRODUCTION CASHFLOW
-- APEC TO BE GRANTED WARRANTS WITH THE RIGHT TO SUBSCRIBE FOR
59.2 MILLION PROVIDENCE SHARES AT GBP0.12 PER SHARE POST COMPLETION
OF THE DRILLING PROGRAMME
Dublin and London - March 28, 2018 - Providence Resources P.l.c.
(PVR LN, PRP ID), the Irish based Oil & Gas Exploration Company
("Providence" or the "Company"), today provides a commercial update
on Standard Exploration Licence ("SEL") 1/11 that contains the
Barryroe oil accumulation. SEL 1/11 is operated by EXOLA DAC
("EXOLA")(80%), a wholly-owned Providence subsidiary, on behalf of
its partner Lansdowne Celtic Sea Limited ("Lansdowne")(20%),
collectively referred to as the "Barryroe Partners". The area lies
in c. 100 metre water depth in the North Celtic Sea Basin and is
located c. 50 km off the south coast of Ireland.
Standard Exploration Licence ("SEL") 1/11 Farm-Out
The Company is pleased to announce that the Barryroe Partners
have signed a Farm-Out Agreement ("FOA") with APEC in relation to
SEL 1/11. APEC is a privately owned Chinese company which has a
strategic partnership with China Oilfield Services Co., Ltd
("COSL") and JIC Capital Management Limited ("JIC") for the
investment and development of offshore oil and gas opportunities
worldwide utilising Chinese drilling units, services and
equipment.
Under the terms of the FOA, in consideration for APEC being
assigned a 50% working interest in SEL 1/11:
Commercial Terms
- APEC will be directly responsible for paying 50% of all the
cost obligations associated with the drilling of 3 vertical wells,
plus any associated side-tracks and well testing (hereinafter
referred to as the "Drilling Programme");
- APEC will provide a drilling unit and related operational
services for the Drilling Programme;
- APEC will finance, by way of a non-recourse loan facility (the
"Loan"), the remaining 50% of all costs of the Barryroe Partners in
respect of the Drilling Programme;
- The Loan, drawable against the budget for the Drilling
Programme, will incur an annual interest rate of LIBOR +5% and will
be repayable from production cashflow from SEL 1/11 with APEC being
entitled to 80% of production cashflow from SEL 1/11 until the Loan
is repaid in full;
- Following repayment of the Loan, APEC will be entitled to 50%
of production cashflow from SEL 1/11 with EXOLA and Lansdowne being
entitled to 40% and 10% of production cashflow, respectively.
Operational Terms
- EXOLA will act as Operator for the Drilling Programme with
technical assistance being provided by the APEC Consortium;
and,
- After the completion of the Drilling Programme, APEC will have
the right to become Operator for the development/production
phase.
Issuance of Warrants to APEC
- Upon completion of the Drilling Programme, APEC will be able
to subscribe for warrants over 59.2 million shares in Providence at
a strike price of GBP0.12 per share (the "Warrants").
- The Warrants, representing circa 9.9% of the current issued
share capital of Providence, are exercisable for a period of 6
months following the completion of the Drilling Programme.
Closing
The Closing of the Farm-Out ("Closing"), which is expected to
occur in Q3 2018, is conditional on completion of all ancillary
legal documentation required to implement the terms of the FOA, and
is subject to the approval of the Minister of State at the
Department of Communications, Climate Action and Environment and
the approval of the Chinese government. In addition, the details of
and schedule for the Drilling Programme are subject to further
ongoing technical discussions between the Consortium, Exola and
Lansdowne. Subject to Closing, the revised equity in SEL 1/11 will
be EXOLA (Operator, 40%), APEC (50%) & Lansdowne (10%).
Further announcements on the transaction will be made in due
course.
Speaking today, Tony O'Reilly, Chief Executive of Providence
said:
"This is a significant transaction for Providence and Lansdowne
which will deliver multiple new penetrations of the areally
extensive Barryroe field. In addition, it also provides for the
acquisition of modern dynamic well test data that should assist in
advancing the field to production. Over the coming months, we will
be working with the APEC Consortium to close the transaction and
finalise the specific timeline and the precise details of the
drilling programme. We are very pleased to have agreed this deal,
which will allow us to avail of 'state of the art' drilling units
and technical capabilities in order to advance Barryroe to first
oil."
Mr. Colin Lui , Chairman of APEC Energy Enterprise Limited
commented:
"APEC, supported by Jianyin Investment Company and China
Offshore Services Ltd, are very pleased to have strategically
joined forces with Providence and Lansdowne to develop the Barryroe
field. This field has significant recoverable resources and we look
forward to jointly developing this opportunity. Whilst the Farm-Out
Agreement has been agreed specifically for Barryroe, the parties
have also agreed to jointly investigate further opportunities in
other licensed blocks offshore Ireland in the future."
End of text from Providence's announcement
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
Enquiries:
San Leon Energy plc + 353 1291 6292
Oisin Fanning, Chief Executive
SP Angel Corporate Finance LLP (Nominated adviser to the
Company) +44 20 3470 0470
Richard Morrison
Richard Hail
Soltan Tagiev
Whitman Howard Limited (Financial adviser and joint broker to
the Company) +44 20 7659 1234
Nick Lovering
Francis North
Brandon Hill Capital Limited (Joint broker to the Company) +44 203 463 5000
Oliver Stansfield
Jonathan Evans
Vigo Communications (Financial Public Relations) +44 207 830
9700
Chris McMahon
Kate Rogucheva
Plunkett Public Relations +353 1 280 7873
Sharon Plunkett
This information is provided by RNS
The company news service from the London Stock Exchange
END
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