Petroleum Africa
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Monday, June 27, 2016
Hague and London Oil (HALO), through its wholly-owned subsidiary Maghreb Exploration, have acquired Premier Oil (SADR). The acquisition gives HALO interests in five exploration license areas in Western Sahara.
A nominal consideration of $1 was payable immediately to Premier SADR and Premier was also granted a gross royalty of 5% over future production revenue from the interests in the blocks held by Maghreb. In addition, Premier will receive 5% of the proceeds of any eventual sale of these interests in each case and in aggregate subject to an agreed cap calculated as 90% of HALO’s market capitalization as at the date of the acquisition and, if it has increased, as at each calendar month thereafter.
HALO believes the SADR licenses are a good strategic fit for Vermeer due to their risk profile associated with on-going political uncertainty, including overlapping license claims between the SADR and Morocco, whilst the promising geology is the main attraction.
The license areas lie on the Atlantic margin, which has seen encouraging drilling results over the past 12 months, particularly in Mauritania and Senegal, resulting in increased interest from larger oil companies. The political situation in Western Sahara remains complicated, therefore no operational activity is required in 2016.
Andrew Cochran, Chairman and Interim CEO, commented “This area of the Atlantic Margin has seen growing industry interest recently, which, in the current environment, demonstrates the attraction of the basin, with some large-scale discoveries in Senegal and Mauritania. The acquisition of five blocks in Western Sahara from Premier Oil expands our SADR position to eight blocks in total. Should the political uncertainties be resolved, this acquisition will add to HALO’s exposure to a high-potential basin. As we continue to build our portfolio at minimal cost in accordance with the new dual strategy, we are pleased to report this further step in progress towards value creation.”
The transaction has already been approved by HALO’s board and remains subject only to customary government, partner and regulatory approvals.
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