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MX Oil takes 5% interest in Nigeria field

Aje’s production target is 11,000 bopd in itially rising to 19,000 bopd in Phase 2 as two more wells are drilled.

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Phase 2 and Phase 3 will require additional investment, most of which MX expects will come from oil sale-generated revenue.

MX Oil (LON:MXO) is to acquire an indirect 5% revenue interest in the OML 113 licence, offshore Nigeria, a prospect that includes the Aje Field.

The stake fits with a strategy of acquiring high impact near term production assets, it said, with production at Aje expected to start by next January.

A placing of 133mln new shares at 4.5p will raise £6mln to bolster its balance sheet as MX Oil has budgeted US$11.5mln of spending to get to first oil. 

Aje’s production target is 11,000 bopd initially rising to 19,000 bopd in Phase 2 as two more wells are drilled.

Phase 2 and Phase 3 will require additional investment, most of which MX expects will come from oil sale-generated revenue.

The deal has been classified as a related party transaction as the right to acquire the 5% was bought from its original owner Jacka by Cornhil Asset Management.

Andrew Frangos is a director of both MX and Cornhill, which will receive payments US$800,000 when the next well spuds and US$1mln when production at Aje starts.

Jacka bought the stake for US$16mln and has invested a further A$11mln in loans to the company holding the asset. MX will acquire the effective 5% stake by acquiring these loans for US$3mln

Stefan Oliver, MX’s chief executive, said it was a game-changing acquisition for the company.

“It provides a platform from which to fund the development of the conventional onshore concessions we are looking to secure in Mexico as part of the on-going Bid Round 1 licensing round.

“Concessions are due to be awarded in Mexico in December this year and we remain confident of winning two or more oil-producing blocks. Alongside expected production in Nigeria by January 2016, the next six months promise a great deal of news flow.”    

 

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