REG - San Leon Energy PLC - Amendment to investment in the Oza field, Nigeria

San Leon EnergyAnnouncement

27/01/2022 16:00

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RNS Number : 8979Z  San Leon Energy PLC  27 January 2022

 

 

 

The information communicated within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse (amendment) (EU Exit)
Regulations 2019/310. Upon the publication of this announcement, this inside
information is now considered to be in the public domain.

 

27 January 2022

San Leon Energy plc

("San Leon" or the "Company")

 

Amendment to investment in the Oza field, Nigeria

 

San Leon, the independent oil and gas production, development and exploration
company focused on Nigeria, is pleased to announce that its investment in the
Oza oil field in Nigeria ("Oza") is now proceeding with the following
amendments.

 

On 1 September 2020, San Leon announced that it had conditionally agreed to
provide a US$7.5 million loan to Decklar Resources Limited ("Decklar"), via
10% per annum unsecured subordinated loan notes of Decklar. Decklar is the
holder of a Risk Service Agreement with Millenium Oil and Gas Company Limited
in relation to Oza. San Leon also announced that it would conditionally
subscribe for a 15% equity interest in Decklar at nominal value.

 

As previously announced, US$6.75 million of San Leon's proposed investment
remained in escrow and was to be released upon satisfaction (or waiver) of
certain conditions precedent. Despite delays to concluding the transaction
documents, Decklar has performed the workover of the Oza-1 well, the results
of which have already been announced by San Leon.  In summary, the Oza-1 well
test has indicated positive oil results from the lowermost zone, encountered
gas in the middle zone and oil in the uppermost zone. San Leon has evaluated
these results and the San Leon Board has recommended that it proceeds with an
investment in Oza. Decklar is in agreement with that strategy and also to
fully involve San Leon in future development planning and determining the
location of the first new well to be drilled on the Oza Oil Field.

 

Accordingly, San Leon has entered into an amendment to its original agreement
with Decklar, the principal terms of which are:

1)    San Leon has agreed to proceed with its investment in Oza, waiving
the remaining conditions precedent.

2)    Of the US$6.75 million of funds held in escrow, US$4.75 million has
now been released to Decklar and US$2.0 million has been returned to San Leon
pending final completion. San Leon is obliged to either provide a further loan
of US$2.0 million to Decklar by 30 April 2022 or, alternatively, accept a pro
rata reduction in its shareholding in Decklar.

3)    San Leon has agreed to waive its option to invest an additional
US$7.5 million in Decklar.

 

The transactions contemplated by the Subscription Agreement and Binding LOI
are subject to final approval by the TSX Venture Exchange.

 

San Leon has previously advanced US$750,000 to Decklar as an initial deposit.
As a consequence of the above transactions, upon completion San Leon will be
interested in US$5,500,000 of 10% unsecured subordinated Decklar loan notes
and a 11.5% equity interest in Decklar, which will be subscribed for at a
nominal value of N 1,294,118 (approximately US$3,400). The key terms of the
loan notes remain unchanged from those described in the Company's announcement
of 1 September 2020.

 

In its audited accounts for the year ended 31 December 2020, Decklar reported
a loss before tax of US$5.1 million and total assets of US$6.0 million.  San
Leon will be entitled to one seat on the board of Decklar.

 

Oisin Fanning, CEO of San Leon Energy, commented:

 

"Our investment in Oza has taken longer to conclude than originally
anticipated, but Decklar's advancement of the project in the interim period
means that we are now committing funds on the back of greater clarity around
the field performance, which should de-risk the project for San Leon.  We
look forward to working more closely with Decklar on the next stage of
development."

 

Qualified Person's Statement

 

Pursuant to the requirements of the AIM Rules and in particular, the AIM Note
for Mining and Oil and Gas Companies, Joel Price has reviewed and approved the
technical information and reporting contained in this announcement. Joel has
more than 25 years' experience in the oil & gas industry and is a member
of the Society of Petroleum Engineers. He holds a BA in Natural Sciences
(Geology) from Cambridge University, an MEng in Petroleum Engineering from
Heriot-Watt University, and an MBA from Durham University. Joel is Chief
Operating Officer for San Leon Energy and is based in the United Kingdom.

 

Enquiries:

 

 San Leon Energy plc                                   +353 1291 6292
 Oisin Fanning, Chief Executive

 Julian Tedder, Chief Financial Officer
 Allenby Capital Limited                               +44 20 3328 5656

 (Nominated adviser and joint broker to the Company)
 Nick Naylor

 Alex Brearley

 Vivek Bhardwaj
 Panmure Gordon & Co                                   +44 20 7886 2500

 (Joint broker to the Company)
 Nick Lovering

 James Sinclair-Ford
 Brandon Hill Capital Limited                          +44 20 3463 5000

 (Joint broker to the Company)
 Oliver Stansfield

 Jonathan Evans
 Tavistock                                             +44 20 7920 3150

 (Financial Public Relations)
 Nick Elwes

 Simon Hudson
 Plunkett Public Relations                             +353 1 230 3781
 Sharon Plunkett

 

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