Petroleum Africa
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Friday, October 27, 2023
Reconnaissance Energy Africa (ReconAfrica) announced that it has entered into a definitive agreement for the sale of its Mexico operations.
Pursuant to a Share Purchase Agreement entered into between Chame Energy Corp and the Company, Chame has agreed to purchase all of the issued and outstanding shares of Renaissance Oil Corp. (RenCan), a wholly-owned subsidiary of the Company. RenCan, through its subsidiaries, owns all of the Company’s assets in Mexico. The effective date of the Agreement is October 25, 2023, with closing subject to acceptance by the TSX Venture Exchange (TSXV). Chame is not a Non-Arms Length Party of the Company, as defined in the policies of the TSXV.
The deemed purchase price for the transaction is $7,500,000. A wholly-owned subsidiary of RenCan had provided a loan to RenCan in the amount of $7,500,000. RenCan, in turn, provided a loan in equal amount to ReconAfrica (collectively the Inter-Company Loans). Pursuant to the Agreement, all Inter-Company Loans, and any other inter-company loans between the Company and RenCan and any of its subsidiaries, are deemed satisfied in full and terminate upon closing without further recourse. In addition, under the Agreement Chame will assume all debts of RenCan and its subsidiaries, along with all present and future liabilities of RenCan and its subsidiaries.
Under the terms of a finder’s fee agreement between the Company and Willem Veltman and Kevin Smith (collectively the Finders), the Company is obligated to pay to the Finders the aggregate amount of $200,000 upon closing of the transaction.
Chame is a private company owned and controlled by Edgar (Benny) De la Torre. Mr. De la Torre and his family, through their group of Mexican companies, have been providing oil field services in Mexico for over 40 years.
Brian Reinsborough, President and CEO of the Company stated “We are very pleased with this transaction. It provides the Company with access to working capital while allowing us to exit Mexico and remove the legacy liabilities from our balance sheet in excess of $100 million. This transaction streamlines our portfolio and enables the Company to focus its resources on progressing our joint venture partnership efforts and preparing to execute our multi-well, high impact exploration program in Namibia which is expected to commence in Q1 of 2024.”
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