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San Leon Energy highlights strong cash position, eyes market for opportunity

The revenue-generating oiler has around US$36.5mln of cash, after US$66mln of shareholder returns last year, and it is looking for its next growth opportunity.

San Leon Energy PLC - San Leon Energy highlights strong cash position, eyes market for opportunity

San Leon Energy PLC (LON:SLE) told investors it is in a strong position as the current environment presents challenges and also opportunities.

The AIM-quoted, Nigeria focussed oil firm had US$36.5mln of cash as at June 19.

In its financial results statement for the past calendar year, the company confirmed gross production of 39,000 barrels of oil per day from the OML 18 operation. Adjusted for field downtime, the average daily production rate amounted to around 50,000 bopd.

WATCH: San Leon Energy committed to paying dividends

Operationally, it was an active value-adding year with two new wells added to the fields whilst a total of fourteen well workovers were also completed. The company noted that significant progress was made in the planning of a new export pipeline and an offshore storage facility which will reduce export downtime and losses.

Sales for 2019 were largely consistent with the prior year, at an average of 29,500 bopd after pipeline downtime and pipeline losses – which were reported at 24% and 22% respectively.

The AIM oiler owns a 10.58% economic interest in OML 18 and Eroton Exploration and Production, the operator, during 2019 secured a 20-year lease renewal giving an expiry in 2039.

San Leon noted that it received some US$43.2mln of cash via the loan note mechanisms in place for OML 18 and a further US$41.5mln has been received in 2020 to date – another US$10mln is expected in the fourth quarter. Some US$103.9mln is then due in 2021, via interest and note repayment.

It reported a US$38.6mln loss for the year, with most of that coming from a non-cash impairment to a non-core asset (an interest in the Barryroe oil field project in Ireland).

San Leon generates revenue from four sources tied to OML 18 – loan repayments by Eroton, the provision of technical services, field services, and via its indirect shareholding in Eroton (which kicks in once cash flow thresholds are met).

Revenue for 2019 amounted to US$266mln, up from US$198mln in 2018, and the company reported a US$118mln gross profit.

Payouts to shareholders began in 2019 with some US$66mln distributed so far, comprising US$32.5mln of share buy-backs and a US$33mln special dividend.

San Leon has to date received US$149.1mln of loan repayments and, as at April 6, there’s a balance of US$82.1mln (at par) of loan notes outstanding.

Highlighting its outlook, the company noted that oil prices have been significantly impacted since early 2020 amid coronavirus (COVID-19) and the quota disagreements within OPEC, though it describes its financial position as “robust”.

The company added that it is monitoring market events closely and is ready to pursue any appropriate opportunities that may arise.

"San Leon is in a strong position, currently sitting with US$36.5mln in cash on our balance sheet,” said Oisin Fanning, San Leon chief executive.

“The current environment generates challenges which Eroton is addressing well, but at the same time it provides a huge opportunity for our company to initiate its next stage of growth.

“We have the cash resources, technical and managerial capability, and established relations to select our next projects.”

Fanning added: “Our robust financial position, additional significant funds expected to be received in the in the next 18 months, existing and anticipated new projects, are planned to continue to provide continued shareholder returns.

“We are proud to have distributed US$66mln to shareholders in the past 15 months.

"San Leon is very well placed to continue to deliver its strategy in the year ahead and the board looks forward to updating shareholders on the company's progress."

Quick facts: San Leon Energy PLC


Price: 40.75 GBX

Market Cap: £183.34 m

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