Petroleum Africa
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Friday, March 24, 2023
San Leon has announced a further update in relation to its current refinancing discussions and the proposed transactions with Midwestern Oil & Gas Company and the company’s further conditional investments in ELI (Energy Link Infrastructure (Malta) Limited). Details of the Proposed Transactions were announced by the company on July 8, 2022.
Update on the refinancing discussions
As announced on December 20, 2022, the company was expecting to conclude a refinancing with a preferred alternative funding partner early in 2023. Discussions have advanced since then, albeit much slower than anticipated, both with this partner and also with a second potential lender. However, the company is now in final discussions and expects to complete the refinancing in the near term. Further announcements will be made as and when appropriate.
Pending completion of the refinancing, San Leon has received only very limited cash inflows and as a result continues to take steps to manage its overheads. These cashflows are contributing towards the day to day running of the business but several creditors remain outstanding, predominantly related to the ongoing transactions with Midwestern and ELI, as described more fully below. The company is maintaining a regular dialogue with these creditors and keeping them informed of the expected conclusion of the refinancing. San Leon’s creditors are not currently putting the company under undue pressure and the board of directors is confident that all creditors will be settled following the conclusion of the proposed refinancing referenced above.
In addition to the proposed refinancing, and as confirmed in the company’s recent announcement on 13 March 2023, San Leon continues to explore a potential sale of its non-core investments in Decklar Petroleum Limited, although the completion of that sale remains subject to the purchaser finalizing its own funding arrangements. With documentation substantially agreed, San Leon has been advised by the purchaser that, once the purchaser’s funding is in place, completion will take place within a matter of days. Nevertheless, the timing is outside of the company’s control at present and further announcements will be made as and when appropriate.
Update on the Proposed Transactions
The Board continues to believe that the Proposed Transactions will be transformational for the company, and it continues to work towards their completion. However, the Board notes the recent challenge by NNPC Limited and OML 18 Energy Resource Limited of the operatorship of Oil Mining License 18 (OML 18), details of which have been announced earlier this month. In addition, the Board notes that Eroton is in the Nigerian Law courts challenging the matter and expects the case to be resolved shortly. San Leon expects that the New Eroton Debt Facility (details of which were announced on July 8, 2022) is unlikely to be completed whilst the legal action is ongoing but the company understands that the documentation is in final form and, consequently, expects that completion could follow relatively shortly thereafter.
The Proposed MLPL Reorganization was previously expected to be concluded by March 31, 2023, but in light of the above and the pending conclusion of San Leon’s refinancing, San Leon now expects completion of the Proposed Transactions to be in the second quarter of this year and the long stop dates of the various underlying agreements, currently set for March 31, 2023, will shortly be extended by mutual agreement. Further announcements will be made by the company as appropriate.
In addition, pending the potential refinancing described above, the company has not yet been able to progress the Further ELI Investments.
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