Nigerian-based Midwestern Oil and Gas Company has sealed an agreement to acquire Mart Resources Incorporation of the United Kingdom (U.K.) in what analysts described as a veritable bailout option for the financially distressed British firm.
Midwestern’s acquisition was backed by funding from London-listed San Leon Energy, which would allow it to initially receive a 4.05 per cent indirect economic interest in Oil Mining Lease (OML) 18 offshore Nigeria.
As a result of the transaction, San Leon will be entitled to just less than 10 per cent of a Nigerian oil field that currently produces more than 30,000 barrels per day.
Acquireco, an indirect wholly owned subsidiary of Midwestern, acquired all of the issued and outstanding common shares of Mart.
Besides, shareholders of Mart received 25 cents cash in exchange for each Mart share held for aggregate consideration of approximately $89.2 million for all Mart shares.
Mart had set March 24, 2016 as the ‘outside date’ for the deal’s completion.
MidWestern (via Acquireco) early agreed on 22 January to acquire all of the issued share capital of Mart by way of a plan of arrangement. Mart shareholders are set to receive 25 Canadian cents per share, valuing Mart at C$89.2 million.
Under the terms of the deal, San Leon will initially receive a 4.05 per cent indirect economic interest in OML 18, which hosts operating oil fields.
Its interest in the project can increase to 9.72 per cent, subject to securing further funds as part of a larger overall deal.
San Leon would also benefit from a minimum 65 per cent ‘enhanced cash sweep’, which would see expeditious repayment of the debt financing.
The company also secures the right to provide oil field services, such as workover and drill rigs, to the operator of OML 18.
Mart Resources, Incorporation is an independent international upstream oil and gas company. The company has a market cap of $72.84 million. Its principal business activities consist of the exploration, acquisition, development and production of gas and oil in Nigeria.
Mart is currently faced with challenges of negative earnings. It is focused on building a portfolio of exploration, appraisal and production assets in Nigeria through participating in joint ventures with Nigerian companies under the Nigerian Marginal Field Development Programme.