Maxim Resources (CVE:MXM) has confirmed it will go ahead with the proposed new venture in the United Arab Emirates.
An agreement with Quest Investments will now see the group acquire a significant indirect stake in an exploration concession covering the majority of Umm Al Quwain, the least populated of the seven sovereign Emirates.
Today’s formal agreement follows the initial terms that were previously announced in recent months.
Maxim can now invest up to US$7.5mln to acquire a 50% stake in Quest Oil & Gas and it will have at least 17.5% interest in the exploration concession. Maxim will pay Quest Investments by paying cash and issuing new shares.
Quest Oil & Gas will in turn own half of CanEmir Petroleum, alongside Arawak Energy. And CanEmir owns of 70% of UAQ PL, which is the holder of the concession. The other 30% of UAQ is Hong Kong domiciled vehicle PTTEP.
Maxim will now pursue with a share sale alongside a concurrent listing on the London’s AIM market.
Andrew Male, Maxim’s chief executive, said: "Maxim's board of directors and senior management are very excited with this next step in the evolution of our company.
“The signing of the SPA sets the stage for the completion of our financing and secondary listing on the AIM market in London.”
Maxim will be ‘uniquely positioned’ as a result of the deal, Male added.
Ian Baron, a stakeholder in Quest who will join Maxim as a director, in the statement said: "The acquisition of its substantial shareholding in Maxim will be a strategic move for Quest which we intend to leverage in order to expand our oil and gas business in the MENA region.
“In particular, Quest's regional networks provide early access to new opportunities, which we can now take greater advantage of with Maxim's public listing and access to the international capital markets.
“We believe this partnership with Maxim is synergistic whereby our combined strengths and expertise will benefit both parties significantly."
Umm Al Quwain is in the northern part of the UAE region, lies next to the Emirate of Sharjah and neighbours the Sultanate of Oman; both of which have known oil fields that are ‘on trend’ with the exploration area.