San Leon Energy PLC Update on investment in Oza Field, Nigeria (9293P)
23 February 2021 - 1:08AM
UK Regulatory
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RNS Number : 9293P
San Leon Energy PLC
22 February 2021
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22 February 2021
San Leon Energy plc
("San Leon" or the "Company")
Update on investment in Oza Field, Nigeria
San Leon, the independent oil and gas production, development
and exploration company focused on Nigeria, notes the announcement
on the funding arrangements made by Decklar Resources Limited
("Decklar Resources") today. On 1 September 2020, San Leon
announced that it had conditionally agreed to invest US$7.5 million
by way of a loan to Decklar. Decklar is the holder of a Risk
Service Agreement ("RSA") with Millenium Oil and Gas Company
Limited on the Oza Oil Field in Nigeria. San Leon also announced
that it was subscribing for a 15% equity interest in Decklar.
Decklar Resources has today announced that a private placement
financing for a total of just over CAD $4 million is in the final
stages of completion, which will enable it to immediately advance
operational activities to re-enter the Oza-1 well at the Oza Oil
Field in Nigeria. Closing of this private placement is expected to
provide sufficient funds to re-enter the Oza-1 well and to
re-establish oil production at the Oza Oil Field through its
wholly-owned Nigeria-based subsidiary, Decklar Petroleum Limited
("Decklar Petroleum"). The previously announced debt funding plans,
including the arrangements of which San Leon is part, are in the
final stages of being concluded which will provide additional
development funding for further operations and development drilling
for the full development of the Oza Oil Field. The current private
placement, which will allow Decklar Petroleum to begin the Oza-1
well re-entry and production operations on an expedited basis, is
expected to close by the end of February 2021.
This additional expected project funding of Oza (which is
anticipated to constitute an intercompany loan at a coupon no
higher than that earned by San Leon's funding, and will not involve
the issue or transfer of any equity of Decklar Petroleum) will
preserve San Leon's rights with respect to its proposed
subscription agreement and the cash sweeps and debt seniority
associated with it.
The funds proposed to be used from San Leon on Oza are now
expected to be used on the drilling of the new well on the Oza
structure. The additional investment outlined by Decklar Resources
is not expected by San Leon to have a material effect on San Leon's
investment risk or returns.
Oza-1 Well re-entry plans and status
Decklar has also announced that the civil works required for the
Oza-1 wellsite are complete, including rebuilding of the access
road, construction of a concrete drilling pad, a concrete mud pit,
buildings and other facilities required for well re-entry and
drilling operations and management. A drilling rig located near the
field has been contracted and will be moved to the Oza-1 wellsite
in the near term, and operations to perform the planned re-entry of
the Oza-1 well will begin shortly thereafter. The recently
completed drilling pad will be used for both the Oza-1 well
re-entry and the first horizontal development well on the Oza Oil
Field.
As previously reported, Decklar Resources states that an export
pipeline that ties the Oza Oil Field production into the Trans
Niger Pipeline (TNP) and continues on to the Bonny Export Terminal,
operated by Shell Production Development Company (SPDC) is already
in place. Infrastructure also in place at the Oza Oil Field
includes a lease automatic custody transfer (LACT) unit fiscal
metering system, infield flow-lines, manifolds and a rental 6,000
barrel per day early production facility. These production and
pipeline facilities should ensure that oil tested from the Oza-1
well re-entry and early production can be immediately delivered and
sold on an expedited basis.
Update regarding debt funding arrangements
Decklar Resources reports that the due diligence required to
finalise the term debt arranged with a Nigerian bank and the
trading subsidiary of a large multinational oil company active in
Nigeria has continued to progress, and the final report by the
independent technical consultant contracted to review reserve and
production data and financial projections was previously issued.
The definitive loan documents and formal legal agreements are being
finalised and are nearing conclusion with the Nigerian bank. As
previously announced, the remainder of the US$7,500,000 for the
subscription agreement with San Leon remains in escrow and will be
released upon satisfaction (or waiver) of the final conditions
precedent which is anticipated in the near future. A further
announcement will be made in due course in relation to the
completion of the subscription agreement.
Enquiries:
San Leon Energy plc +353 1291 6292
Oisin Fanning, Chief Executive
Allenby Capital Limited
(Nominated adviser and joint broker to the Company) +44 20 3328 5656
Nick Naylor
Alex Brearley
Asha Chotai
Panmure Gordon & Co
(Joint broker to the Company) +44 20 7886 2500
Nick Lovering
Brandon Hill Capital Limited
(Joint broker to the Company) +44 20 3463 5000
Oliver Stansfield
Jonathan Evans
Tavistock
(Financial Public Relations) +44 20 7920 3150
Nick Elwes
Simon Hudson
Plunkett Public Relations +353 1 230 3781
Sharon Plunkett
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