Northcote Energy has teamed up with Springer Oil and Gas to buy the US operation of Africa-focused oil and gas exploration and production company Aminex.
The cash and shares deal is worth nearly £3million and includes a production payment of $10 per barrel until a total of £2.7million has been recovered, with first payments to start in January 1 2015.
Under the heads of terms agreement announced today, Northcote and Springer will inject at least £590,000 of development capital into the acquired business over the next year in order to increase production.
Funding will be backed by 100million shares in alternative investment market-listed Northcote pledged by its largest shareholder, RiverBend Energy.
In the event that the purchasers dispose of any of its interest in Aminex USA, London-based Aminex will receive 50% of the proceeds up to a maximum of £887,000 against the outstanding balance of ongoing production payments.
Aminex said it would use the sale proceeds to partially pay down its loan facility, while the deal gave it further flexibility for working capital.
The formal sale and purchase agreement is being prepared, with completion of the transaction subject to shareholder approval.
Aminex chief executive Jay Bhattacherjee said: “I am very pleased to announce the proposed sale of Aminex USA, which would deliver on the company’s stated intention to focus on its highly prospective assets in Tanzania and to grow in Africa as a production and development business.
“With the commitment of Northcote and Springer to boost production by deploying capital into the assets and with the fact they are proven operators in the US, the company would be able to retrieve significant value from this non-core asset for our shareholders.
“This would allow the management team to continue their focus on growing the business in Africa and in particular Tanzania.”
He added: “With first gas scheduled for 2015 from the Kiliwani North field and significant progress being achieved on the seismic programme in Ruvuma, the management team looks to the future with confidence.”
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