MX Oil To Monetise Aje Field Interest After Finding Potential Buyer

Yemisi Izuora/Agency Report
MX Oil Plc
MX Oil PLC on Tuesday said it believes selling its investment in the offshore Aje field in Nigeria is an “attractive option” as it signed a term sheet with a potential buyer.

The oil and gas company received a formal offer relating to the field last month and believes selling its investment will be more attractive to its shareholders than raising equity to fund its investment to first oil.

Also Tuesday, MX Oil said it has conducted a placing of 44.8 million shares at a price of 1.25 pence, raising a total of GBP560,000. In addition, the company’s loan note holders have the right to convert their loan notes into shares at the same price, and have 20 days to make that decision.

MX Oil shares were up 10% to 1.60 pence per share on Tuesday morning.

The unnamed buyer is part of an “established international oil and gas group”. Under the terms of the deal, it potentially would pay MX Oil USD18.0 million in several stages for its investment in the Aje field.

MX Oil invested in an indirect, non-operated, 5% revenue interest in the OML 113 licence which covers the Aje field offshore Nigeria only back in July last year – meaning the deal could yield a healthy profit for the company in a relatively short space of time.

Initially, the buyer will advance up to USD3.5 million to MX Oil in two stages after the deal has become binding, and MX Oil plans to use those funds to finance the remaining cash calls expected to be required in order to bring the Aje asset into production.

“Clearly, whilst good progress has been made so far and the company is moving towards the signing of legal documentation within the next few weeks, the transaction is still subject to contract and the completion of due diligence, and therefore there can be no guarantee that a transaction will either be completed at all or on the above terms,” MX Oil said.

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