Savannah Petroleum PLC has entered a lock up agreement geared towards the acquisition of Nigerian oil and gas assets of Seven Energy International Limited.
According to the company, the transaction will see Savannah take a 40 per cent interest in the Uquo oil and gas field in Nigeria and a 63 per cent interest in Seven Energy’s subsidiary Universal Energy Resources Limited, which has a 51 per cent interest in the Stubb Creek oil and gas field in the south-east Niger Delta.
Savannah will also take an unspecified interest in the Accugas Limited midstream business, an approximate 260 kilometre gas pipeline network and associated gas processing infrastructure, potentially alongside third-party investors.
The agreement envisages a consideration of $87.5 million in cash and $52.5 million in newly issued Savannah shares. This will be paid to the holders of Seven’s current 10 per cent senior secured notes.
It waas gathered that Savannah, will hold the right to participate in a $20.0 million new capital contribution, a new $25.0 million Savannah share issue, and a new $20.0 million facility issued at the Accugas level.
The company added that the transaction will proceed on the assumption that Seven will not be able to reinstate the strategic alliance agreement signed in 2010 between subsidiary Seven Exploration and Production Limited and Nigerian Petroleum Development Company (NPDC), relating to several Nigerian projects.
The company said implementation of the transaction will take around four to five months allowed for Savannah to raise the necessary equity, shareholder agreement, sanction of the schemes, and approval from regulatory and government authorities.
Savannah has also agreed to provide Seven Energy with a super senior revolving credit facility of up to $20.0 million.
Savannah’s Chief Executive, Andrew Knott said: “We are pleased to have reached this milestone in the agreed transaction with the signature of the lock up agreement, which represents the culmination of many months of hard work by Savannah, Seven, its stakeholders and the respective advisory teams. The work relating to Savannah’s admission document remains ongoing and we look forward to providing more detailed updates in the coming weeks.”
Savannah Petroleum’s shares remain suspended from trading on AIM in London until an AIM admission document is published or a termination in talks over the transaction.