LONDON (Alliance News) - Leni Gas and Oil PLC said Wednesday that it has terminated negotiations with Pansoinco s.r.l. over a possible partnership in LGO's oil and gas assets located in Northern Spain.
LGO said that it is no longer actively seeking further expressions of interest in the partnership though did not rule out strategic alliances in the Spanish market in the future.
Under the terms of the potential deal, the partnership would have covered LGO's oil and gas assets located in Northern Spain, including the producing Ayoluengo Field and the prospective Hontomin Field development.
"In the light of the recently announced successful drilling and production results in Trinidad, the Company has reassessed the benefits of the proposed partnership and is now firmly of the opinion that greater value can be obtained from the Spanish assets through LGO investing in additional well capacity in the period of 2016 to 2020, at a time when there is expected to be free cash flow available from the Company's operations in Trinidad," said Neil Ritson, CEO of the AIM-listed company.
LGO said immediate plans for the Spanish assets include the anticipated award of a Production Concession at Hontomin in 2014 and additional well maintenance and stimulation of the producing wells at Ayoluengo Field. The Ayoluengo Field remains profitable with LGO confident that its 2014 production forecast will be met.
The oil and gas production and exploration company said in March that it had entered a partnership with Italian group, Pansoinco s.r.l., for its oil and gas assets in Northern Spain, including the producing Ayoluengo Field, with the intention of making Pansoinco a long-term strategic partner.
The company also said Wednesday that it remains in talks with Maxim Resources Inc concerning the Heads of Terms agreed in March 2013 and extended to 31 May 2014. Following the conclusion of Maxim's court case in Trinidad concerning its claims in the South Erin Block LGO now expects to report further on this matter shortly, it said.
Shares in Leni Gas and Oil were trading 2.79% higher at 2.58 pence per share Wednesday morning.
By Alice Attwood; aliceattwood@alliancenews.com; @AliceAtAlliance
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