LGO has signed a definitive Purchase and Sale Agreement for its remaining minority interests in the US Gulf of Mexico ("GOM") for a cash consideration of $1.625 million to a USA group. The sale is expected to be completed this week.
The funds obtained will reduce the needs to source additional capital through the equity or debt markets and will permit LGO to actively accelerate the development of its exciting Trinidad portfolio, particularly on the Goudron Field, where the Company has recently reported proven and probable (2P) reserves of 7.2 million barrels of oil and 3P reserves of 30.5 million barrels.
Leni Gas and Oil US Inc, a wholly owned subsidiary of LGO, has agreed to sell its remaining interests in seven leases ("the Leases") in the Gulf of Mexico, including the marginal producing Eugene Island-184 field. LGO announced Sept. 18 that it had received a firm expression of interest to purchase its remaining assets in the Gulf of Mexico, including the Eugene Island field and had signed a non-binding indicative offer for $1.625 million subject inter alia to title due diligence. The Company indicated that it was considering accepting, since the GOM assets were viewed as non-core. That offer has been superseded by this new definitive Purchase and Sale Agreement with the same purchaser.
For the year ended Dec. 31, 2011, the revenue and gross profits attributable to the Leases were $611,728 (GBP 383,000) and $325,829 (GBP 204,000) respectively and the gross asset value as at that date was $9.23 million (GBP 5.78 million).
All three participants in the Leases have sold their interests to the Buyer and as part of the transaction, LGO and Byron Energy Inc. have also terminated their Strategic Alliance Agreement signed in November 2009, which was due to expire in any event later this month.
Neil Ritson, LGO Chief Executive, commented:
"Our investment in the offshore Gulf of Mexico has become a distraction to LGO's main strategic drive to invest in onshore production enhancement projects in Trinidad, where LGO holds both high equity positions and field operatorship. These funds will be used to fast track the Goudron redevelopment, for which a second work-over rig will be mobilized to the field shortly."
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