San Leon Energy Plc (LON:SLE), on the day that the Nigeria oil deal is finally scheduled to complete, has told investors that the operations at the OML 18 asset are yielding production rates of 54,000 barrels of oil per day.
The completion of the transaction gives San Leon just less than 10% of OML 18. The company will also receive interest payments, taken from cash flows, from the debt it helped provide to enable the acquisition of OML 18.
It highlighted that Eroton, the Nigerian operator, has now deployed considerable on-ground resources to carry out development activities to increase production from OML 18. San Leon expects to provide services to the work programmes.
"The company has succeeded in finding, funding and executing what we believe is an exceptional deal for shareholders, despite a challenging sector environment,” said Oisin Fanning, San Leon cheif executive.
“We expect the OML 18 transaction to underpin the future cash flow of the company with significant returns to shareholders, redeveloping a world-class producing asset in a country where the oil and gas industry benefits from transactions being in US Dollars and there being no restrictions to repatriation of funds.”
Fanning added: “San Leon is partnering closely with Eroton to execute the redevelopment of OML 18.
“The operational activity listed in this report demonstrates the strong breadth and depth of the technical work being carried out and planned. We look forward to reporting the results of the Nigerian work programme in due course."
In order to acquire its interests in the Nigerian operations San Leon raised £170mln of new capital, and acquired the debt securities that helped finance the assets.
The company subsequently intends to implement a capital distribution policy which will include dividends representing 50% of the company’s share of cashflow from the OML 18 asset.
San Leon, in interim results released this morning, also told investors that it continued its asset optimisation and cost reduction strategy during the first six months of 2016. This has resulted in the relinquishment of certain non-core Polish licences, and six Spanish licence applications, it added.
Financial results, which are of minimal relevance given the significant changes in the company, reveal a €6.23mln loss and that it ended June with €700,000 of cash.