Petroleum Africa
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Sunday, September 23, 2018
Soco International reached an agreement that will give it access to acreage in Egypt. The company reached an agreement to acquire Merlon Petroleum El Fayum Co. for a cash consideration of approximately $215 million.
The consideration will be satisfied through the payment of approximately $136 million in cash and the issue of roughly 66 million new SOCO shares, representing 19.75% of SOCO’s current issued share capital. SOCO will also arrange for the repayment of Merlon’s net debt, which was about $22 million at the end of 2017.
According to the company, the acquisition is a significant step forward in SOCO’s stated objective of expanding and diversifying its resource base to create a full-cycle, growth orientated E&P company of scale.
Merlon is a privately-owned oil and gas company with a 100% operated working interest in the onshore El Fayum concession in Egypt.The El Fayum concession is located in the highly prolific Western Desert, in proximity to local energy infrastructure.
The acquisition is expected to add immediate cash generative production and incremental 2P (net) working interest reserves of 24 million barrels and 2C (net) working interest resources of 37 million barrels. Merlon produced 7,859 bpd (net) in 2017, with the potential to increase production levels to a target in excess of 15,000 bpd (net) by 2023 through the recovery of its discovered 2P reserves and 2C resources.
In addition, the El Fayum concession will provide SOCO with nearly 1,570sqkm of exploration acreage with multiple, identified exploration prospects in proven petroleum systems, as well as a large underexplored area in the northern portion of the concession.
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