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LONDON (Alliance News) - Aminex PLC saw its shares surge Friday after it said it had reached a deal to sell its US business to Northcote Energy Ltd and Springer Oil and Gas LLC for USD5 million in cash and shares, a move that will leave it focused on Africa.
In a statement, the oil and gas company said it will get USD150,000 in cash, USD350,000 worth of AIM-listed Northcote Energy shares, and a production payment of USD10 a barrel until it has recovered USD4.5 million. The production payments will start on January 1, 2015.
Under the heads of terms agreement, which comes before a formal contract is signed, Northcote and Springer have agreed to inject a minimum of USD1 million in development capital into the assets they are buying over the next year to boost production, Aminex said.
When the deal is completed, Aminex will be left with is assets in Tanzania, some of which are on the verge of producing. The company had previously said it wanted to focus on growing in Africa.
"With first gas scheduled for 2015 from the Kiliwani North field and significant progress being achieved on the seismic programme in Ruvuma, the management team looks to the future with confidence," Aminex Chief Executive Jay Bhattacherjee said in a statement.
In a separate statement, Northcote Energy said Springer Oil & Gas would be buying all the Aminex US business, and it would then buy a 70% interest in the Shoats Creek oil field in Louisiana from Springer, and simultaneously farm-out half the interest to North American Petroleum on the same terms, leaving it with a 35% stake.
Northcote Energy will pay a production payment of USD10 a barrel up to a maximum of USD3.15 million and issue Springer with USD350,000 of Northcote shares. North American Petroleum will pay Northcote Energy USD175,000 in cash and assume half the production payment for its farm-in.
Northcote will become the operator of the Shoats Creek field and has committed USD275,000 as its share of the USD1 million development capital pledged by Northcote and Springer.
"The Shoats Creek transaction provides Northcote with an opportunity to expand into a new, highly prolific US onshore oil and gas region with partners equally focused on exploiting an oilfield with great potential and a production history estimated at over 2 million barrels," Northcote Energy Chief Executive Randall Connally said.
"Our partnership with Springer Oil & Gas, LLC and NAP provides the substantial portion of initial capital expenditures to facilitate early development of the project, ensuring that the addition of this property to our portfolio will not divert Northcote's financial resources from our ongoing 2014 work programme in Oklahoma," he added.
Aminex shares were up 5% at 0.761 pence Friday, while Northcote Energy shares were up 2.2% at 0.639 pence.
By Steve McGrath; stevemcgrath@alliancenews.com; @SteveMcGrath1
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