Exploration firm San Leon is making a move into Turkey after taking a majority stake in a local oil and gas firm – as it prepares for a new share listing aimed at raising £31million.
San Leon, which already has interests in Albania and Morocco, has bought a 75% interest in Alpay Enerji for $4million.
Alpay holds 100% stakes in seven conventional oil and gas licences in the country, which San Leon hopes could yield up to 140.7billion cubic feet of gas through low-risk drilling.
A further nine licences in the country could also be transferred to Alpay as part of the deal with previous owner Fatih Alpay, subject to approval.
The move comes as San Leon revealed plans for a £31million share issue, aimed at raising money to fund exploration work on three wells later this year and funding a new 11km oil pipeline in Turkey.
“The acquisition of Alpay Energy is an important milestone for San Leon, bringing both proven reserves and immediate cash flow which are directly accretive to the business,” said San Leon chairman Oisin Fanning.
“The company intends to use capital from this fundraising to bring to market rapidly stable production of 10 MMCFD and 120 BOPD in Turkey, with continued near term investment focused on developing the significant 2P and contingent reserves already discovered. In addition, the extensive land position we are acquiring through the transaction gives the company access to significant exploration upside in proven play fairways.
The cash flow generated from the near-term development of Alpay Energy’s assets is expected to make San Leon cash flow positive across the Company’s entire portfolio of assets by Q2 2014 and to deliver significant cash flow by Q4 2014.
“This will allow the Company’s longer term projects with huge upside, in Poland and Morocco, to develop while negating the need to come back to the market for further funding.”