(Alliance News) - Oilex Ltd said Monday it entered a binding term sheet with Norfolk-based oil & gas firm Burgate Exploration & Production Ltd to wholly acquire the Doyle-Peel licence in the East Irish Sea, offshore UK.
Oilex has also signed an exclusivity agreement with Burgate, Comtrack UK Ltd and Simwell Resources Ltd for the potential acquisition of the Castletown licence, also in the East Irish Sea.
For Doyle-Peel, Oilex will make a cash payment of GBP60,000, and issue 42.3 million shares with a deemed value of GBP85,000.
In addition, overriding royalty will be paid on the basis of 0.5% of gross revenue from commercial production up to the point when capital expenditure related to the development of the licence have been recovered from net cash flows.
Following this, the royalty to be paid will be 2.3% of gross revenue.
The Doyle-Peel deal is subject to approval from the UK Oil & Gas Authority, and the execution of a royalty agreement acceptable to both parties.
For the Castletown agreement, Oilex has pledged to pay GBP68,000 to Burgate, Comtrack and Simwell in January regarding the applicable licence fees payable to the OGA.
Oilex has been granted exclusivity until March 31, 2020, during which time it will finalise the documents and funding for the proposed acquisition.
"The EIS licences provide an attractive entry particularly as they lie adjacent to existing producing fields in a proven gas fairway in the centre of the East Irish Sea Basin. The Doyle-Peel prospects have the potential to host substantial prospective resources and Castletown has discovered gas in multiple reservoirs with the next step being the preparation of a field development plan including appraisal/development drilling," said Managing Director Joe Salomon.
Also on Monday, Oilex said the closing date for submission of bids in the formal sale process for Gujarat State Petroleum Corp's 55% interest in the Cambay production sharing contract in India has now passed.
In early September, GSPC agreed "to use its best endeavours to complete the sale process within 90 days from commencement", which had been expected to occur on or about September 24.
Oilex said it will post an update once further information on the bid process becomes available.
Shares in Oilex - which is based in Perth, Australia - were up 4.7% at 0.20 pence on Monday in London.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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