Canadian oil and gas company Zenith Energy has renegotiated the terms for the acquisition Anglo African Oil & Gas’ subsidiary which is the operator of the Tilapia oilfield in the Republic of the Congo.
AAOG’s fully-owned subsidiary in question is Anglo African Oil & Gas Congo (AAOG Congo) which has a 56 per cent majority interest in the Tilapia oilfield.
Zenith said on Friday that the two companies had entered into a new conditional deed of variation which now includes a 100 per cent interest buy of AAOG Congo and related intercompany loans for a revised total consideration of £200,000 ($249,000).
The variation to the terms of the acquisition means that completion will occur after the passing of a resolution to be put to shareholders of AAOG at a general meeting.
According to the company, completion of the acquisition is therefore no longer conditional on certain regulatory approvals being obtained in the Republic of the Congo.
Under the terms of the deed of variation, payment of the revised consideration will solely depend upon the passing of the resolution at the GM by AAOG shareholders.
Also, AAOG will novate 100 per cent of the intercompany loans with AAOG Congo to Zenith as of the date of completion, equivalent to approximately £12.5 million ($15.5 million).
It is worth noting that AAOG Congo is owed approximately $5.3 million by Société Nationale des Pétroles du Congo as a result of past work performed on the licence.
Following completion, Zenith will assume responsibility for all ongoing costs and liabilities concerning AAOG Congo. Zenith expects to implement a series of cost-cutting measures at AAOG Congo to improve profitability, especially in reaction to the significant recent decline in oil prices.
Andrea Cattaneo , CEO of Zenith, said: “ Acquiring a 56 per cent interest in the potentially transformational Tilapia oilfield, as well as 100 per cent of the approximately $5.3 million in receivables, for consideration of £200,000 is a fantastic result made possible by the exceptional circumstances brought about by the COVID-19 pandemic, as well as the current low oil price environment.
“ We are fully confident that the necessary regulatory approval process in the Republic of the Congo for the transfer of ownership, as well as negotiations for a 25-year renewal of the Tilapia licence, will conclude positively, having been delayed due to the difficulties caused by COVID-19 “.
To remind, shareholders of AAOG initially approved the sale of an 80 per cent stake in AAOG Congo to Zenith Energy in January 2020 , but in March the two firms started renegotiating the terms of the acquisition.