REG - San Leon Energy PLC - Update on Proposed Transactions

San Leon EnergyAnnouncement

03/07/2023 07:00

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RNS Number : 6532E  San Leon Energy PLC  03 July 2023

 

 

 

Prior to publication, the information contained within this announcement was
deemed by the Company to constitute inside information for the purposes of
Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310.
With the publication of this announcement, this information is now considered
to be in the public domain.

 

3 July 2023

San Leon Energy plc

("San Leon" or the "Company")

 

Update on Proposed Transactions

 

Suspension of trading on AIM

 

San Leon, the independent oil and gas production, development and exploration
company focused on Nigeria, announces a further update in relation to the
proposed transactions with Midwestern Oil & Gas Company Limited
("Midwestern") and the Company's further conditional investments in Energy
Link Infrastructure (Malta) Limited ("ELI") (together the "Proposed
Transactions").  Details of the Proposed Transactions were announced by the
Company on 8 July 2022 and set out in an admission document published by the
Company on the same day (the "Admission Document").

 

The Company is also providing an update on its current refinancing
discussions.

 

Update on the Proposed Transactions

 

All longstop dates in relation to the Proposed Transactions have, in agreement
with Midwestern and the other relevant parties, now been extended to 31 July
2023. The longstop dates are in relation to the New Eroton Debt Facilities,
the Sahara OML 18 Acquisition Agreement, the MLPL Reorganisation Agreement and
the ELI Reorganisation Agreement (details of all of which are set out in the
Admission Document).

 

Whilst the board of San Leon (the "Board") continues to believe that the
Proposed Transactions have the potential to be transformational for the
Company, the Board is mindful of the recent legal challenge by NNPC Limited
and OML 18 Energy Resource Limited to the operatorship of Oil Mining License
(OML) 18 ("OML 18") and the inevitable uncertainty that this will cause to
certain components of the Proposed Transactions.  The extension of the
Proposed Transactions' longstop dates will enable the Board to continue to
keep these developments under review.  It is the Board's opinion that NNPC
Limited's challenge has no bearing on the prospects of ELI and, consequently,
it remains determined to complete the elements of the Proposed Transactions
that relate to ELI as soon as its proposed refinancing will allow.

The position on the MLPL Reorganisation Agreement is currently less certain.
 Whilst San Leon's initial 10.58% indirect economic interest in OML 18 is not
impacted by a possible change of operatorship of OML 18, the prospects of
Eroton Exploration & Production Company Limited ("Eroton"), and therefore
Midwestern Leon Petroleum Limited ("MLPL"), are self-evidently contingent in
part on Eroton continuing as the operator of OML 18. Completion of the MLPL
Reorganisation Agreement is predicated, inter alia, on the New Eroton Debt
Facilities. The Board notes that Eroton is itself challenging NNPC Limited's
challenge in the Nigerian Law courts and expects that the New Eroton Debt
Facilities are unlikely to be completed whilst this legal action is ongoing.
 It remains the Company's current intention to complete the Proposed
Transactions in full, but the Board will follow the developments at OML 18
before determining the right course of action for the Company.

 

Documentation in relation to the Proposed Transactions is developed given the
foundation of work undertaken by the Company in this respect over 2021 and
2022, and San Leon therefore expects to be in a position to move to proceed
once the Proposed Transactions' conditions allow.  This will be based, inter
alia, on the conclusion of its refinancing, as well as updated due diligence
in relation to the Proposed Transactions.

 

Update on the refinancing discussions

 

Further to the update on refinancing discussions and outstanding creditors
announced on 14 June 2023, the Company continues discussions in relation to
securing an alternative US$50 million loan facility to be applied towards the
Proposed Transactions and to satisfy the Company's working capital
requirements and pay the Company's unpaid creditors.  The Board remains
optimistic that a conclusion will be reached and expects to provide an update
to shareholders in due course.

 

Accounts for the year ended 31 December 2022 and suspension of trading on AIM

 

Further to the update provided in the Company's announcement of 14 June 2023
in relation to the Company's audited accounts for the year ended 31 December
2022 (the "2022 Accounts"), San Leon has not published its 2022 Accounts by 30
June 2023, as stipulated by Rule 19 of the AIM Rules for Companies.  In
addition to the delay in securing the Company's proposed refinancing, the
delay in publishing the 2022 Accounts is due to San Leon not yet receiving the
audited financial statements for the year ended 31 December 2022 of MLPL,
which includes the consolidated results of both Martwestern Energy Limited and
Eroton, as well as not yet receiving the audited financial statements of ELI
for the same period.  Each of these are independently run companies and so
San Leon has no control over their respective audit and year end processes.

 

As a result, trading in the Company's ordinary shares on AIM will be suspended
with effect from 7.30 a.m. today, pending publication of the 2022 Accounts.

 

Further updates in relation to progress with the 2022 Accounts will be
provided as appropriate.

 

Unless otherwise defined herein, the capitalised defined terms used in this
announcement have the same meaning as those used in the Admission Document.

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)
 James Sinclair-Ford

 John Prior
 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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