Losing 36% to change hands at 0.53p, the junior oil share was AIM’s biggest faller in early deals.
In a statement MX Oil said the buyer of its stake in the Aje field, offshore Nigeria, had yet to make the first payment under the staged US$18mln transaction announced in February.
GEC Petroleum Development Company, the buyer, is working hard to put necessary funding in place, according to MX Oil said.
MX Oil told investors, however, that it believed the Nigerian asset was “becoming both more valuable and further de-risked”. The Aje field - in which MX Oil has an indirectly held (via Jacka Resources) 5% interest - achieved first oil earlier this month.
Keeping the asset would now be seen as a viable option, the company said.
At the same time, MX Oil revealed that its Mexican partner Geo Estratos had not put agreed funds into escrow for a previously agreed asset deal – which would’ve seen MX Oil transfer 55% of three projects to Geo Estratos in return for an increased stake in the Tecolutla asset.
The deal cannot now take place, MX Oil said.
It also told investors that more detailed work on Tecolutla, by independent consultant ERC Equipoise, has indicated the licence is unlikely to generate a sufficient return to justify necessary financial commitments, and the equity dilution that would result from raising such funds.
MX Oil said it will no longer proceed with any of the licences, though it added that Mexico could still be an attractive area for the company.
Stefan Olivier, MX Oil chief executive, said: "It is clearly disappointing that our Mexican partner could not come up with the necessary funds and that Tecolutla has proved to be less attractive than first thought.
“We have therefore had to make a tough decision not to proceed with the Mexico licences at this time, in order to avoid exposing the Company to undue risk and protect our existing investment that has now commenced production.
“I look forward to providing further production updates on the Aje field in due course"