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LONDON (Alliance News) - San Leon Energy PLC late Wednesday said it made more than a EUR218.0 million loss during 2015, but has since struck a deal that will turn the company into a producing firm operating out of Nigeria in what it hopes will be its "transformational event".
The company was still generating nominal revenue in 2015 and a huge rise in impairments alongside a significant arbitration charge caused the loss to balloon to EUR218.1 million from the EUR37.4 million reported in 2014.
Impairments against exploration assets soared to EUR123.7 million from EUR9.2 million and impairments against equity investments rose to EUR43.2 million from EUR3.3 million. There was also a EUR20.6 million arbitration award and EUR4.3 million of charges booked against decommissioning wells, both of which were not present last year.
However, San Leon is hoping to put 2015 behind it through its "transformational" deal that was signed in January which will turn the company into a producing firm in Nigeria through its 9.72% indirect economic interest in the OML 18 block.
Shareholders still need to approve the deal, but if they do then San Leon plans to implement a shareholder distribution policy, returning 50% of free cash flow from the Nigerian asset to shareholders.
To allow that, those huge asset write-offs were recorded in 2015 and an application to reduce share capital/share premium will be made to the Irish courts, it said.
"The onshore Nigerian production transaction is expected to be transformational, repositioning San Leon as a producing company with significant yet low risk upside, and attractive hedges already in place," said the company.
In Poland, San Leon said Rawicz field development continues to progress, with a full development plan to be submitted to the Polish government for approval. It is envisaged that at least three wells, including Rawicz-12 and Rawicz-15, will be available for first production in early 2017
Shares are currently suspended.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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