Petroleum Africa
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Wednesday, August 19, 2015
An agreement arrangement could see the traditionally Egypt only explorer, Sea Dragon Energy Inc., expanding into West Africa. The company has entered into an agreement with Madison PetroGas Ltd. under which Sea Dragon will, subject to certain conditions, acquire all of the issued and outstanding Madison common shares by way of a statutory plan of arrangement. The combined entity is to be renamed SDX Energy Inc.
Madison holds a 35% stake in a PSC covering Cameroon’s West Bakassi Block, partnered with Dana Petroleum and Softrock Oil & Gas. The West Bakassi partners are currently preparing for their first shallow water spud on the block. Madision also holds acreage in Egypt that is complementary to Sea Dragon’s assets. Madison has a 50% working interest in two highly prospective blocks, the West Gharib G & H blocks, on the west side onshore Gulf of Suez. The acreage contains the Meseda field which currently produces at a rate in excess of 4,500 bpd.
The combination of the two companies provides an improved financial position allowing for the combined company to be fully funded through 2016 with a pro forma working capital position of $16.5 million as of closing and a solid cash flow profile.
Paul M. Welch , CEO of Sea Dragon said: “I am very excited about the combination of these two companies. We have complimentary assets and business objectives and by combining, we significantly increase our ability to achieve our goals. The challenging market we are currently in means new strategies need to be employed to create value. By combining, we can build upon our individual strengths, using a more efficient organization, to capture opportunities that individually we could not attain. I am looking forward to working with the new team.”
David Mitchell , CEO of Madison said: “The combined entity will offer enhanced growth potential and we are excited by the possibilities. Size matters in our business and particularly in the current business environment. With similar Egypt portfolios and strategies, a business combination will improve our ability to transact and grow shareholder value. A London, UK base will also improve our operational efficiencies and place us in the premier business and capital markets centre for the Middle East and Africa region.”
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