Mosman Oil & Gas* (MSMN LN): Acquisition of material interests in key leases
Share Price: 0.15p, Market Cap: £5.8m
- Mosman has confirmed the Company will acquire an additional 25% working interest in the Falcon lease (including the Falcon-1 well) and 25% of the adjacent Galaxie lease.
- Mosman will acquire these interests from Baja Oil and Gas, for a cash consideration of US$160k and the effective date is 1 July 2021.
- Since the recent recompletion, production at the Falcon-1 well has been steady with the recent average flow rate of circa 112boepd of gas and 7bopd of oil condensate for a total of 119boepd.
- Unaudited gross revenue from Falcon-1 in June is estimated to be c.US$40k after royalties.
This acquisition means Mosman’s share of production increases by c.30boepd to 90boped (as of the effective date of 1 July). - There is not currently any independent report to quantify resources or reserves on the Falcon on Galaxie leases.
- As previously announced in the Company’s interim results for the six-month period to 31 December 2020, with the Falcon-1 well only coming on production in December 2020, there was no revenue recognised by the Company until cash for hydrocarbon sales was received in January 2021 and thus there was no revenue recognised during H1 2021.
- Similarly, all costs prior to January 2021 have been capitalised so there was no accounting profit or loss for Falcon in H1 2021.
- The consideration will be paid from the Company’s existing cash resources and the transaction is due to complete on 30 July 2021.
- Baja has agreed to use part of the US$160k consideration to repay an existing debt to Nadsoilco; monies owed by Baja for work at the Falcon-1 well, and a prepayment towards the drilling of the Stanley-5 well.
- The AFE for the Stanley-5 well has been issued and drilling is scheduled to take place after the Winters-2 well is drilled.
SP Angel take: Another shrewd acquisition for Mosman picking up further material interests in these key leases, boosting the Company’s production profile whilst ensuring additional upside exposure ahead of drilling at Galaxie. Importantly, the Company also has more control of the timing of technical work and operations with the increase from 50% to 75% WI at Falcon the lease and increasing to 85% ownership at the Galaxie lease, where Mosman will become Operator.
* SP Angel acts as Nominated Advisor and Broker to Mosman Oil & Gas