LONDON (Alliance News) - MX Oil PLC Wednesday said it has given GEC Petroleum Development Co more time to secure the funding needed to potentially purchase the company's investment in the Aje field offshore Nigeria.
MX Oil struck a deal back in late February to sell an option to GEC Petroleum Development that would give it the right to acquire MX Oil's indirect investment in the Aje field.
GEC Petroleum Development is set to pay USD18.0 million to acquire MX Oil's investment in the field, and up to USD3.5 million was expected to be advanced to MX Oil in three stages with the first payment due before the end of March.
GEC Petroleum Development needs to make a USD2.0 million payment to secure the option.
The field is set to begin production imminently, and GEC Petroleum Development is expected to exercise the option, once secured, when the field begins pumping out oil.
Earlier this month, MX Oil said GEC Petroleum Development was close to finalising USD10.0 million of funding which will cover both the initial payments to secure the option and the payment on exercise of the option to acquire the investment.
However, GEC Petroleum Development has not yet made the initial payment to secure the option from MX Oil, which has led the London-listed firm to give the company more time to secure the funding as the end of March is fast-approaching.
"Whilst this funding is taking longer than expected, GEC Petroleum Development Co has informed the company that it is committed to this transaction and expects to have funds available in the coming days," said MX Oil.
"Despite the delay, the company continues to believe that selling the asset to GEC Petroleum Development Co is an attractive option for the company's shareholders as the level of proceeds envisaged equates to a significant premium over the company's current market capitalisation," the company added.
MX Oil shares were trading down 0.9% to 0.669 pence per share on Wednesday morning.
"It is therefore prepared to allow GEC Petroleum Development Co some additional time to put its financing in place," said MX Oil.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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