MX Oil, an oil and gas exploration company, has informed that the sale of its 5% non-operated interest in the Aje Field, offshore Nigeria, has been delayed as the buyer is still gathering funds for the acquisition.
MX Oil agreed to sell its interest in the OML 113 licence offshore Nigeria, which includes the Aje Field, to GEC Petroleum Development Company (GPDC), a Nigerian company exploring and developing oil and gas resources, in February 2016.
The duo agreed the terms for the sale whereby GPDC gained the right to acquire the MX Oil’s indirect investment in the Aje Field for a total consideration of $18 million. The first payment of $2 million was expected on or around March 14, 2016.
After the deadline for payment passed, MX said on March 17 that GPDC was in the process of finalizing its funding to cover both the payments to secure its option and the initial payment due on exercise of the option to acquire the company’s investment in the Aje Field, offshore Nigeria.
Whilst this funding is taking longer than expected, GPDC has informed the company that it is committed to this transaction and expects to have funds available in the coming days, MX said on Wednesday.
MX Oil also said the company was prepared to allow GPDC some additional time to put its financing in place because it believes that selling the asset to GPDC was an attractive option for the company’s shareholders as the level of proceeds envisaged equates to a significant premium over the company’s current market capitalization.
Notwithstanding this delay, the company believes that its investment continues to become increasingly more attractive now that development funding up to first oil has been completed and expected oil production is imminent, MX added.
MX Oil’s Chief Executive Officer Stefan Olivier said: “GPDC has informed us that they are committed to this transaction and, despite interest from a number of other parties, GPDC’s offer remains attractive. Now that the final development expenditure to first oil has been fully covered, the Company is well positioned to take the time to achieve the best result for this asset. We are very pleased with the operational progress made in Nigeria and, given that first oil is now imminent, we are comfortable allowing GPDC a little more time to secure their funding.”