LONDON (Alliance News) - Northcote Energy Ltd and MX Oil PLC both rose in early trade Friday after the pair announced a strategic agreement giving Northcote access to the Mexican oil and gas market and MX said it has secured a new joint venture in Mexico.
Northcote shares were up 11.1% to 0.9 pence early Tuesday, putting it among the top five risers on AIM. MX shares were up 12.2% to 3.76 pence, making it one of the top five risers on the London market.
Under the three-year deal agreed between the pair, Northcote will continue providing advice, introductions and support to MX, the Mexico-focused oil and gas firm formerly known as Astar Minerals. In exchange, Northcote will win the right to participate with MX as a partner on exploration, drilling, development or production of its oil and gas projects in Mexico. It will be able to participate in the projects to an interest of up to 20%.
In addition, it will be awarded warrants, subject to MX shareholder approval, which it can vest on the date that MX enters into any exploration, development or production agreements in Mexico. Northcote will also get the right to appoint a director to the board of MX Oil.
Northcote Chief Executive Randall Connally said the deal "provides us with de-risked exposure to the exciting value potential inherent within the Mexican oil and gas industry now that energy reform is underway".
MX separately said it has signed a joint venture with Geo Estratos SA de CV, a Mexico-based oil services business. Through the deal, MX will work on identifying, evaluating, exploring, developing and producing hydrocarbons in Mexico. Following the deal, due diligence can nowstart on three potential asset transactions Geo identified.
MX also said it has raised GBP2 million through the issue of nearly 66.7 million shares in an oversubscribed placing at 3 pence per share. The new funding will provide the firm with working capital ahead of the upcoming licensing rounds in the opening up of the Mexican energy sector.
"We have an early mover advantage in Mexico and this transformational joint venture with Geo ideally positions MX Oil to capitalise on the country's vast hydrocarbon potential," said MX Chief Executive Stefan Oliver.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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