NIGERIA: San Leon Reports Proposed Midwestern Reorganisation & Proposed Further ELI Investments

Highlights

Series of transformational conditional transactions entered into by San Leon today to increase its exposure to OML 18 and the related infrastructure.  

·    Completion of the Proposed Transactions will consolidate and simplify the group structure: 

o  San Leon’s exposure to the world class OML 18 asset increases fourfold to a 44.1% initial indirect economic interest; and

o  the Proposed Transactions will increase San Leon’s ownership of ELI to c.50%.  ELI is progressing the ACOES pipeline project to provide a dedicated oil export route for OML 18, with the potential for third party fees.

·    CPR on OML 18 issued today with 2P reserves of 323 mmboe net attributable to San Leon with an economic NPV10 value of US$1.1 billion (recent consensus long-term oil price and assuming completion of the Proposed Transactions);

·    The Company has today entered into a US$50m loan facility with MM Capital to provide funding to San Leon; and

·    Further Loan Note Waiver granted to Midwestern to allow for the completion of the Proposed Transactions.

 San Leon is proposing a capital restructuring and issue of preference shares to San Leon Shareholders immediately prior to completion with the preference shareholders having a preferential right to the first US$40m of future dividends paid by San Leon. 

In addition Eroton, the operator of OML 18, is seeking to undertake a series of transactions to increase its interests in OML 18 and increase its funding facilities.  Completion of these transactions (which are yet to be entered into) will be a condition of the Proposed Transactions.

Oisin Fanning, CEO of San Leon, commented: 

“We are delighted to have entered into these agreements to effect the Proposed Transactions.  We believe that this series of transactions, when completed, will be truly transformational for the Company and will deliver value to our shareholders. The transactions will not only increase our initial indirect economic interest in OML 18, a world class asset with unrealised potential, but also our interest in ELI and the new ACOES pipeline which we have long considered to be critical to the future success of OML 18 through the expected reduction of pipeline losses and increase in the uptime for export that it is expected to provide. 

“Going forward these transactions will pave the way for the Company to deliver its strategy of becoming a significant participant in the Nigerian oil and gas market, positioning San Leon to take advantage of further transactional opportunities to enhance and grow our business.”