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SDX Energy confirms it will pay US$30mln in transformational asset acquisition

Published: 02:38 25 Jan 2017 EST

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The deal will be supported by a US$40mln equity raise

SDX Energy Inc (LON:SDX, CVE:SDX) revealed it will pay US$30mln to acquire Circle Oil’s assets in Egypt and Morocco.

The transformative deal will see SDX increase net production by almost 250% to 4,705 barrels oil equivalent per day.  Reserves, meanwhile, rise by 64% to 12.03mln barrels oil equivalent.

As part of the deal, SDX also acquires a positive US$18.3mln working capital position (comprising US$1.9mln of cash, and US$16.4mln of ‘receivables less payables’).

It is supported by a US$40mln funding, with new shares being issued through an accelerated book-build placing.

As a result of the deal SDC increases its stake in the NW Gemsa field to 50%, from 10%, adding 2,600 boepd of net production to the group. It also delivers a 75% stake in the Sebou and Lalla Mimouna which presently yield 750 boepd of net production and 3.8mln boe of reserves.

The deal represents a significant discount – Circle’s creditors take 39 cents on the dollar for the group’s US$77.5mln debt – and SDX highlights that it is in keeping with its strategy that targets distressed production and development opportunities in North Africa alongside organic growth.

SDX ultimately aims to build its production base up to 25,000 to 30,000 boepd and it seeks to diversify its asset base into a new jurisdictions.

Once the US$30mln acquisition has been paid for, the remainder of the new funds will be used to support work programmes in Morocco.

It is proposed that SDX will issue new shares at a placing price of 30 pence (50 Canadian cents). The placing is being run by brokers Cantor Fitzgerald, GMP FirstEnergy and Stifel.

The company expects to complete the accelerated book build process on Wednesday January 25, before closing a binding agreement before the end of the week. The new placing shares are expected to be admitted to the register by January 27.

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