MX Oil consolidates assets in Mexico

17th Mar 2016 16:13

(ShareCast News) - MX Oil was consolidating its Mexican assets on Thursday, signing a binding agreement to assign its 55% working interest in three of its four Land Contract Areas to local partner Geo Estratos, in return for Geo's share in the remaining area - Tecolutla - plus $1.8m cash.The AIM-traded oil and gas investing company said that, having carried out further assessment on the four areas, it decided it was best to focus its resources on what it believed had the most attractive investment opportunity.Its board confirmed Geo would remain the operator of Tecolutla, and would still maintain a significant investment in the asset, allowing MX to benefit from its local knowledge and expertise.Geo would also fully finance its pro-rata share of the cost of the asset's development going forward, though MX retained the option to become the operator of Tecolutla subject to regulatory approvals and processes.At the same time, MX Oil confirmed the first $2m payment from GEC Petroleum Development Company, towards the $18m required to acquire MX's Nigerian investment, was now due.It had been advised by GPDC that they were in the process of finalising $10m in funding to cover both the initial payments to secure the option, and the payment on exercise of the option."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," said MX Oil chief executive officer Stefan Olivier."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," Olivier explained.