Despite the drought in investment in oil and gas in Nigeria, however, all hope is not lost for the industry as some Europe based companies are showing significant interest in some oil and gas assets owned by indigenous oil companies. It is either they are increasing their equity stakes or they are angling for new partnership.
One of such companies is San Leon Energy which has almost completed a new deal with a Nigerian indigenous company, Eroton on Oil Mining License (OML)
San Leon Energy has been working on a Nigerian transaction, and as a result, its shares were suspended, for so long that it faces the prospect of its listing on London’s AIM being canceled.
The company must publish an admission document giving further details by July 8, it acknowledged. Should its listing be canceled, San Leon plans to press ahead with the completion of the transaction and then seek readmission to AIM later this year.
The company does expect to publish the admission document on time, it noted. That said, Nigeria has proved to be a location where deals can take longer than expected – or unexpected turns.
It must finalise three key issues, it said.
The documentation on the Eroton debt facilities, the documentation on the new San Leon loan facility and the historical financial information for the year to the end of 2021 for Energy Link Infrastructure (ELI), MLPL and San Leon.
The company suspended its shares on AIM on June 24, 2021. San Leon currently has a 10.58% indirect stake in OML 18.
The deal underway would see San Leon increase its indirect stake in Eroton to 98%, from 39.2%. As a result, the company would increase its stake in OML 18 to 44.1%. It has structured the deal as a reverse takeover, given its size.
San Leon also said the deal would help resolve a number of issues on OML 18. It will resolve a number of disputes between Eroton and OML 18 Energy Resource, a subsidiary of Sahara Group. These include various legal actions. The deal would “extinguish” these problems, leaving Eroton to focus on developing the licence.
The deal would also allow the refinancing of Eroton’s existing term loan facility with Guaranty Trust Bank.
San Leon said that it has received an indicative proposal for a loan facility to fund its acquisition in ELI and working capital requirements. It is working to convert this into a documented loan.
San Leon has also extended a payment waiver to MLPL, Midwestern and Martwestern. The principal is $82.2mn and the interest is $23.4mn. This now runs to July 8, or earlier.
San Leon CEO Oisin Fanning said OML 18 had “an excellent production history as well as a vast amount of, to date, unrealised potential”.
“It would be no understatement to say this has been a very challenging and complex undertaking, but I am delighted to say that we have made considerable progress with the Potential Transaction and we now expect to be in a position to publish our Admission Document alongside our report and accounts by July 8.”
In September 2016, San Leon Energy secured a 10.584%* initial indirect economic interest in Oil Mining Lease 18 (“OML 18”), onshore Nigeria. The Lease contains nine discovered fields, Alakiri, Asaritoru, Awoba, Bille, Buguma Creek, Cawthorne Channel, Krakama and Orubiri – Figure 1) as well as a significant number of satellite exploration and appraisal prospects. The only field not entirely on block is Awoba which straddles OML 18 and OML 24 and is governed by a unitisation agreement dividing production equally between the OML owners. Cumulatively, OML 18 has produced over 1 billion bbls of oil (including Alakari condensate) and 1.8 TCF of gas