United Oil & Gas Plc, through its subsidiary, UOG Holdings plc, has announced that, as part of the Company's ongoing optimisation of its portfolio and capital allocation strategy, it has signed a conditional sale and purchase agreement with PXOG Marshall Limited, a subsidiary of Prospex Energy PLC, for the sale of 100% of the share capital of UOG Italia Srl for a consideration of €2.165 million in cash. The effective date of the transaction is 1 January 2021.
· United agrees to conditionally sell Italian asset to Prospex Energy PLC for €2.165 million
· As per the terms of the deal, United will receive an immediate deposit payment of €108,235, with the remainder of the consideration payable on completion
· The sale consideration is at a modest premium to the total assets held by UOG Italia at 31 December 2020 and removes any further development expenditure associated with the Selva development
UOG Italia Srl holds a 20% non-operated interest in the Podere Gallina licence, in the Po Valley region of Italy, which contains the Selva gas development project. United acquired the interest in the licence via a farm in agreement with the operator Po Valley Energy Limited in July 2017.
Prospex Energy plc is an AIM listed European focused energy company focused on natural gas opportunities and already holds a 17% interest in the Podere Gallina licence.
The terms of the sale will see an immediate deposit payment of €108,235, with the remainder of the €2.165 million total consideration and any working capital adjustments payable on completion. The sale is conditional upon (1) receipt of approval of the Italian Authorities to the change of control of UOG Italia Srl and (2) Prospex completing a fundraising process. The transaction is expected to complete in late 2021.
The divestment of UOG Italia Srl., following a review of United's portfolio, and capital allocation policy, will see United exit activities in Italy. Subject to completion, the transaction will remove development capital expenditure associated with the Selva development. The transaction proceeds, in addition to the proceeds from the UK Central North Sea divestments, will provide additional financial flexibility for the Company to drive the growth of its low-cost production business in Egypt and the Greater Mediterranean area, complemented with selected high impact exploration opportunities in the Caribbean and Latin America.
For the year ended 31 December 2020, UOG Italia Srl. reported a pre-tax loss of €36,934 and had total assets of €2,061,620.
Brian Larkin CEO of United Oil and Gas PLC, commented:
" We are pleased to sign this sale and purchase agreement with our joint venture partner on the licence, Prospex Energy. We wish them, and all stakeholders of the Selva project, well during its development.
We believe that now is the optimal time to focus our portfolio on our low-cost production business in Egypt and high impact exploration opportunities in the Caribbean and Latin America. The proceeds of this transaction and those of the previously announced North Sea asset divestments will further strengthen our balance sheet to support this growth strategy."