CFA Society Singapore
SINGAPORE (Jan 28): Rex International announced on Monday it is divesting its stakes in two Norway assets through its 90%-owned subsidiary Lime Petroleum.
The oil and gas exploration company is selling to Lundin Norway its 30% stake in the Rolvsnes discovery in PL338C, PL338E and its 20% stake in the Goddo prospect in PL815.
The transaction involves a cash consideration of US$43 million ($58.2 million) and a contingent payment of US$2 million if no adverse event materialises within a 12-month period from the completion of the divestment.
Rex uses sonar and satellite technology to identify distinct seismic resonance signatures to identify the possible presence of hydrocarbons in the ground without any drilling.
The sale is a part of the group’s business model to sell mature assets. The proceeds from the disposals will be used for exploration and production activities, particularly on the Norwegian Continental Shelf, and to maintain a high equity stake in its Oman licence.
The deal takes into consideration the unaudited net asset value of both sites, which is about US$13.29 million as at Sept 30, 2018.
Based on number of shares issued at the end of September 2018, net asset value per ordinary share will increase to 11.40 US cents from 9.20 US cents after the sale, while earnings per share will be 1.71 US cents from a loss per share of 0.50 US cent.
The Rolvsnes site has a gross estimated resource range of between 14 and 78 million barrels of oil. While an exploration well will be drilled at the Goddo site this year.
On completion of the sale, Lime Petroleum still holds 30% stakes in two North Sea licences, and a 20% stake in a Norwegian Sea licence.
As at 4.27pm, shares in Rex are up 1.2 cents or 14.8% at 9.3 cents after trading resumed at 2.30pm from the halt requested before market opened this morning.