A new ‘lock-up’ agreement has been signed in respect of the proposed deal, setting out the terms for the acquisition of specific assets held by Seven Energy International.
The AIM-quoted firm will take a 40% stake in the Uquo oil and gas field, a 62.5% in vehicle that in turns owns 51% of the Stubb Creek oil & gas field and will also take on an interest in a midstream operation, called Accugas Limited, which has a gas pipeline network and processing facilities.
It sees Savannah paying US$87.5mln in cash to certain Seven Energy debt holders, as well as issuing US$52.5mln worth of new Savannah shares, and the sellers will also have the right to participate in a subsequent capital raise.
Additionally, Savannah noted that Seven Energy has been holding talks with the Nigerian oil authorities regarding the potential reinstatement of asset contracts that had expired earlier this year, though at this point these interests aren’t included in the acquisition agreement (but it could be added at a later date).
If the assets are to be reinstated an upfront payment, potentially up to US$200mln.
Savannah Resources shares remain suspended from trading on AIM, while the potential reverse takeover is advanced.
The transaction is expected to take around 4-5 months to complete.
"We are pleased to have reached this milestone in the agreed transaction with the signature of the lock-up agreement, which represents the culmination of many months of hard work by Savannah, Seven, its stakeholders and the respective advisory teams,” said Andrew Knott, Savannah chief executive.
“The work relating to Savannah's admission document remains ongoing and we look forward to providing more detailed updates in the coming weeks."