logo-loader
viewADM Energy Plc

MX Oil’s Nigeria deal stalls and Mexico projects disappoint

Its Mexican venture is being dropped and the proposed buyer of the Aje field has yet to secure funding - now MX Oil reckons keeping the Nigeria investment may be a viable option.

Trader in despair, MX Oil shares plummet
MX Oil was AIM's biggest faller in Wednesday's early deals

MX Oil Plc (LON:MXO) shares plummeted in Wednesday’s early as it dropped recently acquired Mexican assets and revealed its Nigerian oilfield sale had stalled.

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"

Quick facts: ADM Energy Plc

Price: 5.25 GBX

AIM:ADME
Market: AIM
Market Cap: £3.03 m
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

In exchange for publishing services rendered by the Company on behalf of ADM Energy Plc named herein, including the promotion by the Company of ADM Energy Plc in any Content on the Site, the Company receives from...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Investor Update: Punchy read-through valuation for ADM Energy's Nigerian oil...

Headlines from the Proactive UK newsroom. ADM Energy (LON:ADME) has had a punchy read-through valuation placed on its 5% stake in its field, offshore Nigeria. Petronor has acquired a 12.2% economic interest for US$10mln with a further US$25mln based on future gas production. Reneuron...

3 weeks, 3 days ago

RNS

Holding(s) in Company

3 days, 13 hours ago

Holding(s) in Company

4 days, 10 hours ago

Conditional Subscription Update

4 days, 15 hours ago

Holding(s) in Company

1 week, 5 days ago

Holding(s) in Company

2 weeks, 1 day ago

Conditional Subscription Update

2 weeks, 1 day ago

Holding(s) in Company

2 weeks, 2 days ago

Holding(s) in Company

3 weeks, 1 day ago

2 min read