11 Jul 2014 07:00
REGENCY MINES PLC
("Regency" or the "Company")
Investment in UK Onshore Oil and Gas Prospect
11 July 2014
Regency Mines Plc ("Regency" or the "Company"), the mining exploration and mineral investment company with interests in nickel and other minerals in Australia, Papua New Guinea and Sudan, is pleased to announce that it has signed a Heads of Agreement ("HOA") with Horse Hill Developments Ltd ("HHDL") for Regency to acquire a 5% stake in HHDL.
This investment follows a decision by Alba Mineral Resources Plc ("ALBA"), in which Regency currently has a 14.87% direct stake, to participate in the HHDL project.
HHDL is a newly incorporated special purpose company which has the rights to acquire a 65% participating interest in the Petroleum Exploration and Development Licence 137 ("PEDL 137") in the Weald Basin, UK. The participants in the Horse Hill -1 well are HHDL as operator with a 65% farm-in interest and Magellan Petroleum Corporation with a 35% interest. HHDL will receive its 65% interest by completing the proposed well at the property by the end of August 2014. The well is expected to spud during July 2014 and is targeting a number of conventional stacked oil and gas targets up to a depth of 8,512 feet.
The Weald Basin is prospective for conventional oil in Mesozoic sandstones, with the primary reservoir rocks being the Portland sandstone formations where Purbeck Mudstones form the capping rock. The Horse Hill prospect lies 7.5 km to the south-east of the Brockham oilfield and was drilled by Esso in 1964 with oil shows, in a location shown by seismic re-interpretation to be separated by a fault from the main target structure.
Co-investors in HHDL besides Alba, include Angus Energy Ltd, Solo Oil Plc (AIM:SOLO), Doriemus Plc (AIM:DOR), Stellar Resources Plc (AIM:STG) and UK Oil & Gas Investments Plc (AIM:UKOG).
Acquisition Terms
The total consideration payable by the Company is £300,000. An initial non-refundable deposit of £10,000 is payable on signing of the HOA and the balance is subject to completion and execution of definitive agreements which the parties are currently finalising. At completion, RGM will make a further payment of £40,000 and the balance of £250,000 would be payable according to cash calls required for drilling the well. Following the payments, Regency will own 5% of HHDL and will upon completion of the well indirectly hold a 3.25% beneficial interest in PEDL 137.
Andrew Bell, Chairman, comments:"The opportunity to invest with Alba, Angus Energy, and the other investors in this exciting UK oil and gas project follows extensive due diligence and analysis. By co-investing with Alba, Regency supports Alba in its strategic re-launch into the oil and gas space, which Regency has been assisting. Regency increases its exposure to the potential upside of the project while minimizing downside risk and total cost, offering Regency investors access to near-term cash generation and an increase in the liquidity of its existing investment in Alba. While a relatively small financial commitment at this stage, the Regency Board believes that this strategic shift will help unlock value for Regency amidst challenging market conditions in the mineral resource sector."
For further information contact:
Andrew Bell0207 747 9960 or 0776 647 4849 Chairman Regency Mines Plc
Colin Aaronson / David Hignell 0207 383 5100 NOMAD Grant Thornton UK LLP
Nick Emerson01483 413500 Broker SI Capital Ltd.
Rupert Trefgarne0203 128 8817 Media Relations MHP Communications