The United Oil & Gas PLC (LON: UOG) share price surged 26.7% after entering into a binding Asset Purchase Agreement (APA) with Quattro Energy Limited to sell its UK Central North Sea Licence P2519 for a maximum sum of up to £5.7 million (c.US$6.95 million).
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The deal will see United Oil receive an initial cash payment of £2.45 million (c.US$3 million) at completion. The company will receive a further payment of £1.0 million after the approval of an FDP (expected in late 2023) for Block 15/18e.
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In addition, United Oil is set to receive £2.25 million in contingent payments once production at the license area hits certain milestones, such as three, four or five million barrels of oil. The UK Central North Sea Licence P2519 contains the Maria discovery in Block 15/18e.
The deal will be completed once the two companies receive approval from the North Sea Transition Authority (NSTA) for the license sale. To seal the deal, Quattro must also pay the required initial payment of £2.45 million in cash.
The two firms expect to complete the deal within the next 90 days. The oil block license sale reflects United Oil’s focus on its new ventures in the Greater Mediterranean and North Africa region. However, the firm remains opportunistic for value-accretive transactions outside these core areas.
Investors were happy that United Oil plans to use part of the sale proceeds to fund a limited share buyback programme. The company plans to seek shareholder approval for the program at the annual general meeting.
Brian Larkin, the United Oil CEO, commented: “Active portfolio management, to realise value from our assets, has always been a key part of United’s strategy. We are pleased to be signing the APA with Quattro, who have agreed to a materially higher maximum consideration than in 2021, reflecting the increased value of the Licence following the work completed by our technical team over the last 12 months.”
United will use some of the proceeds to fund the continued execution of its ambition to grow its business within its core focus areas.
*This is not investment advice.
United Oil & Gas (UOG) share price.
The United Oil & Gas (UOG) share price surged 26.73% to trade at 1.28p, from Monday’s closing price of 1.01p.
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