REG-ADM Energy Plc: Formation of Joint Venture and Investment, Joint Venture Agreement to Acquire Oil and Gas Assets
29/04/2026 07:02
29 April 2026
ADM Energy PLC
("ADM" or the "Company")
Formation of Joint Venture and Investment
Joint Venture Agreement to Acquire Oil and Gas Assets
ADM Energy PLC (AIM: ADME; BER and FSE: P4JC), a natural resource investing
company, announces the formation of, and an investment in, Vega Upstream JV,
LLC (“Vega Upstream JV”), a joint venture company formed by Covenant Oil
Group Corp. (“COG”) and the Company, primarily to identify and coordinate
investment opportunities in US onshore oil and gas assets.
Vega Upstream JV has identified a
portfolio of operated and non-operated producing natural gas, natural gas
liquids (“NGL”) and oil wells in Oklahoma, USA, together with a
fee-generating natural gas gathering system and its associated surface land
and equipment ( “Midcon
Assets”). Subsequently, Vega Upstream JV has executed a Stock and Membership
Interest Purchase Agreement (“Purchase Agreement”) with the owner of a
private U.S. company (the “Target”) to acquire all of the issued and
outstanding share capital of the Target and all of the issued membership
interests in its subsidiaries, and the Midcon Assets, for a base purchase
price of c. US$14.9 million (the “Purchase Price”). On 28 April 2026, Vega
Upstream JV paid a deposit of US$500,000 (the “Deposit”) to execute the
Purchase Agreement. The Deposit will be applied to the Purchase Price at
closing of the transaction, anticipated on or before 31 May 2026, with an
effective date of 1 February 2026 (the “Midcon Acquisition”).
The Midcon Acquisition and associated due diligence and transaction expenses
are expected to be financed via an institutional credit facility of
approximately US$14.0 million (the “Debt Financing”) and an equity
contribution to Vega Upstream JV of US$1.0 million (inclusive of the Deposit)
of which approximately US$100,000 will be invested by ADM. These funding
sources are expected to satisfy the Purchase Price together with associated
transaction costs and any additional customary closing adjustments. Further
announcements related to Debt Financing will be made in due course.
Vega Upstream JV has further issued to Electric Guitar PLC, a
public limited company incorporated in England and Wales, quoted on the AIM
Market of the London Stock Exchange (“ELEG”), an option to acquire an
interest of 50% in certain of the Midcon Assets (the “ELEG Option”). The
ELEG Option terminates on 31 July 2026.
Closing of the Midcon Acquisition by Vega Upstream JV is not contingent on the
ELEG Option.
Highlights
*
The Company will acquire:
*
A 50.0% membership and voting
interest in Vega Upstream JV (and, through Vega Upstream JV, the operator of
the Midcon Assets)
*
A 10.0% asset interest in the underlying Midcon Assets
*
The option to increase its interest in Vega Upstream JV up to
35% on or before the closing date of the Midcon Acquisition.
*
The Midcon Assets include:
*
An average interest of 49.4% in 28
operated wells.
*
An average working interest of 3.9% in 250 non-operated wells.
*
Interest in three drilled, uncompleted wells contribute to
near term uplift in production.
*
Significant behind pipe potential for future exploitation.
*
A Midstream (gathering) system that transports circa 4.4
mmcf/d of natural gas produced by the Midcon Assets and eight (8) other area
producers to the sales point.
*
Expected net revenue over the next twelve months of circa
US$850,000 from existing production.
*
Potential US$100,000 consultancy fee on closing of the transaction
associated with the ELEG Option.
Regarding the Midcon Acquisition, Executive Director, Randall J. Connally,
stated:
“We believe the Midcon Acquisition will be transformative for the Company,
with anticipated cash receipts resulting from the transaction potentially
reaching c. US$850,000 over the next twelve months and additional upside and
news flow resulting from interests being acquired in three drilled, but
uncompleted wells, a large inventory of behind pipe opportunities to be
exploited.
“In addition, the potential upside via the provision of services to Vega
Upstream JV by Eco Oil, associated with the operation of the Midcon Assets,
additional fees and benefit should ELEG exercise its option to participate;
and upside that may be realised from either, or a combination, of drilling and
farm-out of some of the 58 drilling locations included as part of the Midcon
Asset portfolio.”
The Midcon Assets
The Midcon Assets comprise:
1.
Operated Upstream Assets
Working interest of an average of 49.4% in 28 operated natural gas, NGL and
oil wells located in Custer County, Oklahoma, together with a defined
portfolio of 58 horizontal drilling locations, of which approximately 72.0%
are attributable to the operated assets. Comprising recent net production of
c. 3.2 mmcfe/d (533 BOE/d) and approximately 58% of revenue from crude oil and
liquids.
1.
Non-Operated Upstream Assets
Working and/or overriding royalty interest of an average of 3.9% in
approximately 250 non-operated natural gas, NGL and oil wells located across
multiple counties in Oklahoma.
1.
Midstream Assets
A natural gas gathering system transporting c. 4.4 mmcf/d of natural gas
produced by the Midcon Assets and eight other area producers to the sales
point covering approximately four-square miles. A toll of $0.74 per Mcf
together with approximately 160 acres of associated surface land supporting
current and future operations.
Third-party Report
Vega Upstream JV has commissioned a third-party reserve report by Haas & Cobb
Petroleum Consultants with respect to the Midcon Assets. The report is
anticipated to be released in advance of the closing date of the Midcon
Acquisition and further announcements will be made in due course. The
Company will have access to, but did not commission this report.
Deposit Funding Agreement
ADM Energy USA, Inc. (“ADM USA”) and Covenant Oil Group Corp. entered into
a deposit funding agreement dated 28 April 2026 (the “Deposit Funding
Agreement”), pursuant to which COG has funded the full US$500,000 Deposit.
Under the terms of the Deposit Funding Agreement, ADM USA has agreed to make
its required capital contribution of US$100,000 to Vega Upstream JV on or
before closing of the Midcon Acquisition as contemplated in the Purchase
Agreement.
Investment and Participation of the Company in Vega Upstream JV
As a result of the group’s participation of approximately US$100,000 as a
capital contribution to Vega Upstream JV, its interest in Vega Upstream JV
will comprise:
Capital Asset Membership Voting
Member Contribution Interest Interest Interest
ADM US$100,000 10.0% 50.0% 50.0%
Covenant Oil Group Corp. US$900,000 90.0% 50.0% 50.0%
Total US$1,000,000 100.0% 100.0% 100.0%
The asset interest reflects the interest of each party in the underlying
Midcon Assets. The membership and voting interest reflect the interest of
each party in the economics and governance of Vega Upstream JV. ADM and COG
will each appoint two members to a four-member Board of Directors of Vega
Upstream JV of which each will appoint a Co-President. The Co-Presidents will
jointly act on behalf of Vega Upstream JV which will act as operator of the
Midcon Assets for regulatory purposes in the State of Oklahoma.
Vega Upstream JV will earn income as operator of the Operated Upstream Assets
and the Midstream System (the “COPAS Fees”). The COPAS Fees averaged
approximately US$55,000 per month and commodity marketing fees averaged
US$6,800 per month in 2025 for a total of circa US$61,800 per month in 2025
(unaudited, as reported by the Target). Any profit or loss resulting from
Vega Upstream JV acting as operator, after payment of operating and
administrative costs, including fees due pursuant to the ASA, will be split
according to the membership interest of each party in Vega Upstream JV.
ADM and COG have further agreed that the Company (or an affiliate) will
provide administrative services to Vega Upstream JV through an Administrative
Services Agreement (the “ASA”) and be compensated for any such services
provided at a 20.0% premium to the actual cost incurred associated with the
provision of services pursuant to the ASA.
In addition to the asset interest and fees to be earned pursuant to the ASA
and equity interest in Vega Upstream JV, ADM will earn a US$300,000 fee to be
paid out as a preference payment of US$10,000 per month for 30 months
following closing of the Midcon Acquisition by Vega Upstream JV for its
services in identifying, performing due diligence, negotiating and securing
debt financing for the Midcon Acquisition (“Acquisition Fee”).
At the sole discretion of the Company, ADM has the right to increase its
economic interest in Vega Upstream JV to 35% by making an additional capital
contribution proportionate to the increase in interest. The additional
capital contribution is to be funded on or before closing of the Midcon
Acquisition.
Potential Revenue Upside to Eco Oil Disposal, LLC
Eco Oil Disposal, LLC (“Eco Oil”) (a 60.0% owned subsidiary of the
Company) may provide, at market prices, certain services to Vega Upstream JV
in operation of the Midcon Assets. The directors of the Company believe that
the services that Eco Oil may provide (including trucking, dirt work and other
general oilfield services) could generate up to US$90,000 per month in revenue
based on the director’s analysis of actual operating costs (to 100% of the
operated properties) incurred by the operator of the Midcon Assets for the
year ended 31 December 2025.
Summary of Budgeted Revenue Impact to the Company
Based on current operating performance of the Midcon Assets and the potential
revenue streams identified above, ADM’s 10.0% asset interest in the Midcon
Assets (
(1)
) may generate positive monthly
gross cashflow over the next twelve months (based on prevailing commodity
prices (
(2)
) ) as follows:
As Structured w/ ADM Option Exercise
Source of Cashflow: Interest Cashflow Interest Cashflow
Midcon Assets 10% $26,400 35% $65,300
Vega Upstream JV ( 50% $36,000 50% $36,000
(3)
)
Acquisition Fee Payments 100% $10,000 100% $10,000
Total ( --- $72,400 $111,300
(4)
)
1.
Assuming exercise by ELEG of the ELEG
Option described in more detail herein.
2.
Based on (i) WTI Crude Oil Prices of
$78.14 per barrel and (ii) natural gas prices of $3.42 per mcf.
3.
Includes terms of Administrative
Services Agreement and proportionate share of profits expected from ownership
of regulatory operator.
4.
The above does not include any revenue
that Eco Oil may earn from the provision of services to Vega Upstream JV
associated with the operation of the Midcon Assets.
Potential Participation by Electric Guitar PLC
Vega Upstream JV has issued to Electric Guitar plc an option to participate in
the Midcon Acquisition via the purchase of a 50.0% interest in the Operated
Upstream and Midstream Assets (“ELEG Option”). If ELEG elects to exercise
the ELEG Option, ADM and COG will be compensated, at closing of the exercise
of the ELEG Option, by (i) a US$300,000 total fee payable to ADM and COG (the
“ELEG Acquisition Fee”). Up to 50.0% of the total amount of the ELEG
Acquisition Fee may be settled by ELEG through issuance of ordinary shares at
the placing price associated with any placing completed in conjunction with
its RTO transaction with the remaining 50.0% to be settled in cash; and, (ii)
a warrant over 5.0% of the enlarged share capital of ELEG at an exercise price
that is 150% of the placing price of ordinary shares issued by ELEG with its
RTO (the “ELEG Warrants”).
ADM will receive US$100,000 and COG will receive US$200,000 of the ELEG
Acquisition Fee. ADM and COG will split the ELEG Warrants evenly upon exercise
and closing of the transactions contemplated by the ELEG Option.
Related Party Transaction
COG is a company owned and controlled by Claudio Coltellini who is a director
of the Company. The participation by both ADM and COG in the Midcon
Acquisition, including entering into the Purchase Agreement and Deposit
Funding Agreement constitutes related party transactions pursuant to Rule 13
of the AIM Rules for Companies (the “Transactions”).
With the exception of Claudio Coltellini, the Directors of the Company
consider, having consulted with its nominated adviser, Cairn Financial
Advisers LLP, that the terms of these Transactions are fair and reasonable
insofar as its shareholders are concerned.
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this inside
information is now considered to be in the public domain.
Enquiries:
ADM Energy plc +1 214 675 7579
Randall Connally, Executive Director
www.admenergyplc.com
Cairn Financial Advisers LLP +44 20 7213 0880
(Nominated Adviser)
Jo Turner, Liam Murray
About ADM Energy PLC
ADM Energy PLC (AIM: ADME; BER and FSE: P4JC) is a natural resources investing
company with investments including a 100.0% ownership interest in Vega Oil and
Gas, LLC; a 60% economic interest in Eco Oil; a 42% economic interest in OFX
Technologies, LLC ( www.ofxtechnologies.com ); and a
9.2% profit interest in the Aje Field, part of OML 113, which covers an area
of 835km² offshore Nigeria. Aje has multiple oil, gas, and gas condensate
reservoirs in the Turonian, Cenomanian and Albian sandstones with five wells
drilled to date.
Forward Looking Statements
Certain statements in this announcement are, or may be deemed to be,
forward-looking statements. Forward looking statements are identified by their
use of terms and phrases such as "believe", "could", "should", "envisage'',
"estimate", "intend", "may", "plan", "potentially", "expect", "will" or the
negative of those, variations or comparable expressions, including references
to assumptions. These forward-looking statements are not based on historical
facts but rather on the Directors' current expectations and assumptions
regarding the Company's future growth, results of operations, performance,
future capital and other expenditures (including the amount, nature and
sources of funding thereof), competitive advantages, business prospects and
opportunities. Such forward-looking statements reflect the Directors' current
beliefs and assumptions and are based on information currently available to
the Directors.
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