20 Apr 2016 16:30
NORTHCOTE ENERGY LIMITED - Placing, TVR and Mexico Operations UpdateNORTHCOTE ENERGY LIMITED - Placing, TVR and Mexico Operations Update
PR Newswire
London, April 20
Northcote Energy Ltd / Index: AIM / Epic: NCT / ISIN: VGG6622A1057 / Sector: Oil & Gas
20 April 2016
Northcote Energy Ltd
(‘Northcote’ or ‘the Company’)
Placing, TVR
and
Mexico Operations & Business Development Update
Northcote Energy Limited is pleased to announce that it has completed a placing of 1,587,301,587 new ordinary shares of no par value each (the ‘Ordinary Shares’) in the capital of the Company at a placing price of 0.0315 pence (the ‘Placing Price’) per Ordinary Share (the ‘Placing Shares’) to raise gross proceeds of £500,000 (the ‘Placing’), which will be used to complete the Mayan Drilling Fluids remediation plant while retaining adequate working capital and flexibility to consider other strategic opportunities available to the Company.
Highlights:
Completed placing of £500,000 gross proceeds to the Company Initiating fully funded plan to complete remediation facility in Comalcalco, Mexico in 90 days Plans for remediation facility include 20% increase in capacity over originally contemplated facilities Developments to date at facility include: preparation of surface; improvement of existing office facilities; order key equipment and having obtained key water handling permit from CONAGUAPlacing Details and TVR
The Placing is conditional on Admission and application will be made for the Placing Shares, which will rank pari passu with the existing Ordinary Shares, to be admitted to trading on AIM (the ‘Admission’). It is expected that Admission will become effective and dealings in the Placing Shares will commence on or around 26 April 2016.
Following the issue of the 1,587,301,587 Placing Shares, the Company’s issued share capital will consist of 10,098,253,604 Ordinary Shares with voting rights. No Ordinary Shares are held in treasury at the date of this announcement and therefore following the Admission, the total number of Ordinary Shares in the Company with voting right will be 10,098,253,604.
The above total voting rights figure may be used by shareholders as the denominator for the calculation by which they will determine if they are required to notify their interest in, or a change to their interest in the Company.
In addition, in connection with the Placing the Company has agreed to award Cornhill Capital Limited, the Company’s Broker and Placing Agent (‘Cornhill’), warrants over 158,730,159 Ordinary Shares valid for two years from the day of the Placing, which shall give Cornhill the right to acquire 158,730,159 Ordinary Shares of the Company at the Placing Price.
Completion Plan for Mayan Drilling Fluids Remediation Facility
Northcote owns 51.0% of Mayan Drilling Fluids SAPI de CV (‘MDF’), a joint venture company it formed with local Mexican partner Gaia Ecologica S.A. DE C.V. (‘Gaia’) to provide recycling and remediation services in Mexico. MDF is currently focused on constructing a facility in Comalcalco, Mexico (‘the Facility’) which will provide waste recycling and remediation services to local industry including the recycling of oil cuttings and the provision of other oil field services to the reopening energy sector.
Having slowed plant development in Autumn 2015 until the Lutcher Moore #20 well at Shoats Creek was completed, Northcote and Gaia are now moving forward to complete the facility. Approximately US$380,000 will be immediately funded by the Company for purposes of fully completing and commissioning the plant within ninety (90) days. Upon completion, the Facility will commence operations on a 24 hour per day, 7 day per week basis, with a processing capacity of 845 tons per day which represents an increase of approximately 20% from the 700 tons per day originally contemplated (please see RNS dated 29 July 2015).
Under the supervision of Gaia, the following steps have been completed at the site of the Facility in recent months:
Completion of construction pad for the rock and soil processing equipment and further improvements required to support the intended remediation and recycling operations; Acquired and installed a scale on site to weigh oil cuttings brought to the site - this equipment will be used on a continuous 24 hours per day, 7 days per week basis; Have ordered equipment for final completion of facility The existing on-site structure has been re-modelled as the operations office and a dormitory area for use by workers has been built to accommodate the demanding operational tempo of the facility on commissioning; Operational safety and environmental training initiated for key members of the local team to provide for a best-in-class safe and environmentally friendly operation; and, Key water handling and treatment permit obtained in February 2016 by the CONAGUA (National Commission of Water) necessary for commissioning the plant will also allow MDF to move forward with service contracts previously announced in 2015.Strong Business Case for the Facility
It is Northcote’s belief that, despite a lower oil price environment, the energy reform in Mexico is on track and that recent developments continue to support the business case for and will greatly benefit the MDF facilities in Tabasco given the following factors:
Strategically and centrally located facility with access to two key highways in the heart of onshore oil & gas fields, blocks to be awarded pursuant the recent bid round and state run blocks; Proximity to key port supporting all offshore oil and gas activity in the southern portion of the Gulf of Mexico; Substantial nearby refining and industrial activity to diversify revenue streams; High demand for remediated solids for road construction and fill-in of numerous quarry mines in immediate area; Mexico is generally recognised as one of the lowest production cost oil regions in the world Excellent potential for the Facility to support remediation requirements in the downstream sector (refining, marketing and distribution of petroleum products) as well; Having previously been segregated from international competition and compliance with environmental protection and other industry standards within the refining and retail fuel distribution market, the introduction of PEMEX to international competition has already created a push for: improving environmental standards; mandating greater environmental and financial accountability improving the retail fuel distribution segment to operate line with international standardsBusiness Development Update
Abraham Achar, Northcote Vice President responsible for the development of new business opportunities in Mexico, has focused on leveraging existing relationships to develop opportunities outside the remediation business in the downstream sector of Mexico’s energy industry. To this end, Northcote is in discussions with US based providers of services to the downstream oil and gas sector regarding various potential business opportunities, joint ventures or potential acquisitions for purposes of addressing the opportunities in Mexico.
Mayan Drilling Fluids remains a critical component of Northcote’s long term strategy both for participation in Mexico’s upstream sector, but also as a platform to leverage into non-oil price dependent, secular growth opportunities in Mexico resulting from the energy reform, including remediation, and potentially other services, within the retail fuel distribution business.
Northcote Managing Director Randall J Connally said “We continue to believe that Mexico is a major part of Northcote’s future growth and are excited to be moving forward again with respect to completion of the remediation facility. We are committed to Mexico for the long haul and plan to leverage our existing investment and operations to build a substantial business providing services to the Mexican energy sector. With the strong portfolio of opportunities available to us as a Company, we are pleased that the capital to accelerate completion of the remediation facility was available while allowing the Company to retain adequate working capital to protect the Company and, potentially consider participation in other opportunities that may become available to us as a result of our portfolio of participation interests with MXO and ADL as well as other business development initiatives related to our business plan in Mexico. ”
**ENDS**
For further information visit www.northcoteenergy.com or contact the following:
| Randy Connally | Northcote Energy Ltd | +1 214 550 5082 |
| Ross Warner | Northcote Energy Ltd | +44 7760 487 769 |
| Roland Cornish | Beaumont Cornish Ltd | +44 20 7628 3396 |
| James Biddle | Beaumont Cornish Ltd | +44 20 7628 3396 |
| Elliot Hance | Beaufort Securities Ltd | +44 20 7382 8300 |
| Nick Bealer | Cornhill Capital Limited | +44 20 7710 9612 |
| Elisabeth Cowell | St Brides Partners Limited | +44 20 7236 1177 |
Notes:
Northcote Energy Limited is an entrepreneurial energy company with diverse interests. The Company combines a portfolio of US exploration and production assets in Louisiana, Texas and Oklahoma as well as the development of new business opportunities in the US and Mexico directly along with strategic relationships in Mexico with MX Oil plc and in Indonesia with Andalas Energy and Power Plc.