United Oil & Gas has announced that it has agreed to a long stop date extension with Quattro Energy for the sale of its P2519 licence, containing the Maria discovery.
United Oil and Gas (AIM: UOG) had expected the deal for the Maria discovery to be completed within 90 days when it was announced on January 17.
After a delay in April, the deal was due to complete by May 17, however, United agreed on another extension to give Quattro more time, until July 31.
In the latest update to the sale process, United said that it had agreed to a long stop date extension for all conditions precedent to be met to allow completion of the sale, namely regulatory approvals to enable the transfer of funds.
The extension will be automatically granted following Quattro meeting founding conditions by September 20 this year.
Analyst Ashley Kelty said: “This will give Quattro more time to try and secure funding to complete the deal.
“In order to get a deal done, UOG has conceded to a different schedule for payments – payment of $100k now, with initial consideration reduced to £1.45m, with contingent payments increased to £3.25m around production milestones and £1.0m upon FDP approval.”
‘Lame duck’
Mr Kelty added that the extra time granted to Quattro may help the firm get “over the line”.
However, “if they’re struggling to get money now, it does beg the question of how they think they’ll fund a development.” the analyst commented.
The discovery, which is located in the UK Central North Sea, was found to hold up to 17.7 million barrels of oil and gas, in a contingent resources audit conducted by Gaffney, Cline and Associates earlier this year.
United Oil and Gas had initially hoped to sell all of its Central North Sea assets to Quattro in a £3.2m deal struck in July 2021.
Kelty concluded: “Punters must now be wondering if UOG has effectively given the licence away for c£1.5m, given it looks increasingly unlikely any of the contingent payments are likely to be made as Quattro looks like a lame duck.”
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