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San Leon Energy backs Midwestern’s deal for Mart Resources

San Leon is handling the financing for the acquisition of Mart Resources, and it will get a 9.75% stake in the OML 18 operations which produced 30,000 bopd and is ramping up.
San Leon Energy backs Midwestern’s deal for Mart Resources
San Leon will also have the right to provide oil field services.

San Leon Energy (LON:SLE) has unveiled a deal which would see it acquire just less than 10% of a producing oil field in Nigeria.

It is helping Midwestern Oil and Gas, an indigenous Nigerian oil company, raise US$180mln of financing to acquire Toronto listed Mart Resources (CVE:MMT) and continue the ongoing development of the OML 18 block.

The AIM quoted company says it has already provided proof it can provide more than US$100mln of the total financing and it is in advanced discussions to raise the balance.

Once Midwestern’s acquisition of Mart is complete, and once Midwestern has completed a restructuring, San Leon will have a 9.72% indirect interest in the OML 18 asset.

San Leon will also have the right to provide oil field services, such as workover and drill rigs, to the operator of OML 18.

Oisin Fanning, San Leon executive chairman, said: “the company has been able to achieve a deal that capitalises on the current low oil price environment and buy into production with significant yet low risk upside and attractive hedges already in place. 

He also described it as a large step towards San Leon becoming a dividend-paying company.

“The proposed transaction will provide San Leon with substantial production and cash flow not only from both production but also from service provision in a world-class asset, and is also expected to provide a platform for further transactions.”

OML 18 had gross production of 31,600 barrels oil per day (in September 2015) and a programme is underway to ramp up output.

San Leon highlighted that the arrangements would not be dilutive to its shareholders. The transactions are expected to close in March 2016.

The company’s AIM shares have been suspended as of 15:00 today.

Midwestern is paying C$0.25 per share to acquire Mart, which is a 194% premium to its closing price yesterday in Toronto.

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