Hague and London Oil PLC Corporate Update (1707C)

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RNS Number : 1707C

Hague and London Oil PLC

24 June 2016

24 June 2016

Hague and London Oil PLC

("Company", "HALO")

Corporate Update

Hague and London Oil PLC (AIM: HNL), the hydrocarbon exploration company, announces the acquisition, via its wholly-owned subsidiary Maghreb Exploration Limited ("Maghreb"), of Premier Oil (SADR) Limited ("Premier SADR"), which holds interests in five exploration licence areas in the Sahrawi Arab Democratic Republic ("Western Sahara" or the "SADR"). HALO initially disclosed the intention to acquire these blocks from Premier Oil PLC ("Premier Oil" or the "Seller") as part of its portfolio restructuring and strategic repositioning announced on 11 May 2016.

Highlights of the transaction:

-- Premier SADR holds interests in the following exploration licence areas: Daora (50%), Haouza (50%), Mahbes (50%), Mijek (50%), Laguera (100%)

-- Maghreb, which holds HALO's existing three licences in SADR, to be subsequently transferred to Vermeer Exploration BV ("Vermeer"), a wholly owned subsidiary of HALO focused on higher risk assets

   --    A low cost way of building HALO's existing position in this highly prospective area 

A nominal consideration of $1 was payable immediately to Premier Oil and the Seller has also been granted a gross royalty of 5% over future production revenue from the interests in the blocks held by Maghreb and 5% of the proceeds of any eventual sale of these interests in each case and in aggregate subject to an agreed cap calculated as 90% of HALO's market capitalization as at the date of the acquisition and, if it has increased, as at each calendar month thereafter. In addition, the interests held by Premier SADR are subject to a gross royalty in favour of Premier Oil of 5% over future production revenue from such interests and 5% of the proceeds of any eventual sale of such interests. There are no revenues or profits currently attributable to the assets.

Once the transaction is complete Maghreb will be transferred to Vermeer Exploration, which is currently a wholly-owned subsidiary of HALO. As previously disclosed, HALO is progressing the sale of 51% of its interest in Vermeer, and will provide a further update when appropriate.

HALO believes the SADR licences are a good strategic fit for Vermeer due to their risk profile associated with on-going political uncertainty, including overlapping licence claims between the SADR and Morocco, whilst the promising geology is the main attraction.

The licence areas lie on the Atlantic margin, which has seen encouraging drilling results over the past 12 months, particularly in Mauritania and Senegal, resulting in increased interest from larger oil companies. The political situation in Western Sahara remains complicated, therefore no operational activity is required in 2016.

Andrew Cochran, Chairman and Interim CEO, commented:

"This area of the Atlantic Margin has seen growing industry interest recently, which, in the current environment, demonstrates the attraction of the basin, with some large-scale discoveries in Senegal and Mauritania. The acquisition of five blocks in Western Sahara from Premier Oil expands our SADR position to eight blocks in total. Should the political uncertainties be resolved, this acquisition will add to HALO's exposure to a high-potential basin. As we continue to build our portfolio at minimal cost in accordance with the new dual strategy, we are pleased to report this further step in progress towards value creation."

The transaction has already been approved by HALO's board and remains subject only to customary government, partner and regulatory approvals.

For further information please contact:

 
 
                                          [phone] 
 Hague and London Oil PLC                 9268 
 Andrew Cochran, Chairman 
  and Interim CEO 
 Natalia Erikssen, IR/PR enquiries 
 
 Stifel Nicolaus Europe Limited         [phone] 
  (NOMAD & Broker)                       7600 
 Callum Stewart / Ashton Clanfield 
 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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June 24, 2016 02:07 ET (06:07 GMT)