MX Oil plc, in an update on its Nigerian investment, said that as announced on February 26, the Company entered into an agreement with GEC Petroleum Development Company, GPDC, to have the option to acquire its Nigerian investment for an overall consideration of US$18 million.
In a statement, it said that the first payment of US$2 million from GPDC to secure the option is now due to be paid. GPDC has informed the Company that they are in the process of finalising funding of US$10 million to cover both the initial payments to secure the option and the payment on exercise of the option to acquire the Company’s Nigerian investment.
It said that notwithstanding the recovery in the oil price and the close proximity of the Company’s investment to expected oil production, the Company continues to believe that this transaction with GPDC is an attractive option for MX Oil.
It also believes that GPDC is committed to effecting the transaction particularly, as previously announced, this acquisition is key to GPDC’s strategy going forward.
GPDC has now indicated it intends to make the initial payment of US$2 million within the next seven days and, for additional comfort, has provided the Company with a corporate guarantee from Global Energy Company Limited to support the total initial payments to secure the option of US$3.5 million.
MX Oil’s Chief Executive Officer Stefan Olivier said: “This is an exciting time for MX Oil. We continue to believe that GPDC is committed to acquire our Nigerian investment and are pleased that they are putting in place funding now to cover both the initial and option exercise payments.
“This, combined with our agreement to assign three out of our four onshore Mexican assets, if completed, will leave us with a strong cash position to advance our preferred investment, Tecolutla in Mexico, where multiple low cost/high impact development opportunities have been identified. With this in mind we are looking forward to receiving ERC Equipoise’s CPR on the asset, which we believe has the potential to be a company-making investment. I look forward to providing updates on progress.”

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