MX Oil Update on proposal for its Nigerian investment

Further to its announcement on 25 January 2016, MX Oil has provided an update in connection with the proposal it has received for its Nigerian investment in the proven Aje field offshore Nigeria. The Directors believe a sale of its Nigerian investment is an attractive option for the Company and they have today signed a term sheet with the proposed purchaser who is part of an established international oil and gas group.
Under the terms of the proposal, the Company will receive US$18 million for the sale of its investment upon meeting certain conditions as set out below. Initially up to US$3.5 million will be advanced to the Company in two stages after the signing of binding legal documentation. These funds will be used to finance the remaining cash calls expected to be required for the investment in order to bring the underlying asset into production.
The proposed purchaser will then have the right to acquire the investment, which is most likely to be when initial oil production commences. On exercise of this acquisition right, the Company will receive one payment of US$5.75 million and then a second payment of US$5.75 million six months later. The balance of US$3 million will then be paid in three annual US$1 million instalments from the date of the exercise of the acquisition right, although these payments may be accelerated in the event that the oil price exceeds US$45 per barrel for a three month period.
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If, for whatever reason, the purchaser decides not to exercise its acquisition right then the amount initially advanced will either be repaid, converted into a convertible loan in the company holding the investment or become a secured loan to be repaid from the cash flow generated from oil production.
Source: MX Oil
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