United Oil & Gas plc has started a second attempt to sell to Quattro Energy Ltd licence P2519 containing the Maria oil discovery within block 15/18e in the UK Central North Sea.
QUATTRO ENERGY
The company signed a binding asset purchase agreement (APA) to sell the licence for up to £5.7m, which is a higher price than the first failed deal of £3.2m for two licences: P2480 and P2519.
United added that Quattro had also entered a binding agreement to be acquired by Canadian company Jesmond Capital Ltd. Both firms need to conduct a financing to pay for licence P2519.
APA TERMS
Quattro will pay £2.45m in cash to United at completion, followed by an additional £1m on approval of an field development plan, expected late 2023, for block 15/18e.
Additionally, Quattro will pay contingent bonus payments of up to £2.25m upon reaching gross production thresholds from the field of three, four and five million barrels.
The completion of the APA is subject to pre-conditions including regulatory approval and that Quattro must hold an amount equal to the completion payment of £2.45m in cash.
United anticipates completion of the APA within 90 days.
SHARE BUYBACK
On completion of the APA, United will consider options to use a portion of the proceeds to fund a limited share buyback programme, as well as strengthen its balance sheet and grow the company.
The company will seek shareholder approval at this year’s general meeting for the buyback proposal.
FIRST ATTEMPT
United initially signed a sales and purchase agreement with Quattro in September 2021 to sell licences P2480 and P2519 for up to £3.2m.
Quattro was unable to raise the necessary funds despite extending the deadline, and United cancelled the deal.
In July 2022, Optiva valued the Maria discovery at £33m and in January 2023 Gaffney, Cline & Associates estimated potential contingent resources.
SIGNIFICANT RETURN
Chief executive Brian Larkin added that a key part of United’s strategy was to manage actively its portfolio to realise value from its assets.
“We are pleased to be signing the APA with Quattro, who have agreed a materially higher maximum consideration than in 2021, reflecting the increased value of the licence following the work completed by our technical team over the last 12 months.
“Whilst the company explored options whereby we participated directly in the future development of Maria, we ultimately believe that monetising the Maria discovery at this time provides us with a significant return from our investment and gives us additional capital to continue to execute our ambition to grow the business in our core focus areas in the Greater Mediterranean and North Africa regions.”
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