Business
Proposed Partial Sale of Santa Cruz Sur Assets
Proposed Partial Sale of Santa Cruz Sur Assets.
About this update from Nativo Resources Plc
[{"type":"text","content":"\n\n \n \n9 May 2023\n \nEcho Energy plc\n(\"Echo\" or the \"Company\")\n \nProposed Partial Sale of Santa Cruz Sur Assets, Issue of Option on a Producing Columbian Portfolio and Equity Issue at a Premium\n \nEcho Energy, the Latin American focused energy company, announces the execution of a binding Term Sheet for a transaction, subject inter alia to shareholder approval, designed to provide much needed funding for the Company through the sale of 65% of the Company's 70% of the current Working Interest in Santa Cruz Sur to Selva Maria Oil S.A. and Interoil Exploration and Production ASA (the \"Buyers\") for a cash consideration of up to £1.725M, an award of an option to purchase a producing Columbian portfolio and the issue of equity in Echo Energy PLC at 0.065 pence per share (a more than 100% premium to the closing price on 5 May). This transaction would enable the Company to retain a much smaller interest in Santa Cruz Sur, whilst also seeing the Company's liability for the previously announced significant in-country creditors and other liabilities reduced significantly. In addition the transaction would see the Buyer providing in country licence financial guarantees and provides a potentially attractive entry point into Columbia.\n \nThe Proposed Transaction\n \nPursuant to the term sheet and subject to contract, Echo will sell 65% per cent of its current 70% Working interest in the Santa Cruz Sur assets to Selva Maria Oil SA and Interoil Exploration & Production ASA. On Completion the Company Echo therefore will retain a 5% working interest in the assets, will have an option to buy another 5% back and will have an indirect exposure through equity in the Operator.\n \nTotal consideration for the sale is up to £1.725M of which:\n \n· Consideration of £825,000 with:\n· An upfront payment of £75,000 on execution of transaction documents, with the balance of £750,000 due on completion once shareholder approval has been obtained.\n· Payment in kind of £400,000 via transfer of Interoil shares upon completion, providing upside exposure to the Santa Cruz asset via an equity position in the Operator\n· Additional contingent payment of £400,000 should production from the assets rise to 4,000 boepd (gross).\n·...