Independent Oil & Gas company African Petroleum has set the expected date for the completion of the proposed merger with a privately held Africa-focused company PetroNor.
African Petroleum agreed to combine with PetroNor for an all-share consideration of around 816 million shares in African Petroleum in March 2019. The company said on Thursday that the completion of the transaction would occur by the end of June 2019.
PetroNor holds a 10.5% indirect interest in the PNGF Sud fields and the right to negotiate entry into a 14.7% indirect interest in an exploration license covering the PNGF Bis fields, both offshore Congo.
Subject to shareholder approval and other customary conditions, African Petroleum will, at the completion of the transaction, change its name to PetroNor E&P Limited. The board of directors of African Petroleum unanimously recommended the transaction.
As per the terms of the transaction, existing African Petroleum shareholders will receive one for one warrants to preserve a potential upside from the company’s existing exploration portfolio in The Gambia and Senegal.
The combining of the two companies will provide African Petroleum with diversified, low-risk, long-life, and high-quality producing assets with current net production of around 2,300 bbl/d and medium-term exploration upside in a well-established operating jurisdiction, the firm said.
African Petroleum further said the would also enable the company to strengthen its ability to preserve and develop the company’s portfolio in The Gambia and Senegal through access to PetroNor’s existing cash, future cash flow, and assets with additional debt capacity.
It is worth noting that the closing of the deal was initially expected to occur by the end of April 2019.
Jens Pace, CEO of African Petroleum and proposed CEO of the combined company, said: “This is a truly transformative transaction that diversifies our portfolio considerably while simultaneously strengthening our position with regards to ongoing arbitration and farm-down processes.
“We have been proactively seeking opportunities to diversify our footprint away from pure-exploration, and this proposed combination with PetroNor delivers all the criteria we sought.
“The combined company will benefit from a proven reserve base generating strong and predictable cash flow and material upside potential from the Congo assets, as well as considerable exploration upside from our existing portfolio.”