Perth-based oil and gas explorer Po Valley Energy has agreed to sell its assets in northern Italy, including the Selva gas field, in a share purchase agreement worth about $21 million.
Perth-based oil and gas explorer Po Valley Energy has agreed to sell its assets in northern Italy, including the Selva gas field, in a share purchase agreement worth about £12 million ($21 million).
In exchange for Po Valley’s exploration assets, the company will receive 200 million shares in London-based gas producer Saffron Energy, in which it already has a 53 per cent stake.
Po Valley plans to eventually distribute its 300 million shares in Saffron to existing Po shareholders on a pro-rata basis.
Shares in Saffron last traded at 4.38 pence in October on the London Stock Exchange AIM.
Saffron’s shares have been suspended since October after the company announced it would acquire assets from Po and Italy-based Sound Energy.
Under the agreement announced today, Saffron will also purchase Sound for 185.9 million shares.
Po shares soared nearly 90 per cent to 7.5 cents last week after it announced a discovery at its Selva gas field.
Po will retain a 5 per cent royalty interest in Selva and be reimbursed for its development funding.
Po chairman and chief executive Michael Masterman said the deal provided the company’s shareholders with a number of benefits, including direct shareholding in abetter capitalised Saffron, listing on the more liquid AIM market, and an expanded asset base.
Mr Masterman said that, in addition to creating a substantial European asset base through this transaction, Saffron believed there were particular opportunities to acquire exploration licences in South-East Asia.
As a result, Saffron would pursue a combined European and South-East Asian regional exploration strategy focused on multi Tcf (trillion cubic feet), low cost, onshore gas piped to high value, growing markets.
Saffron has also announced it will raise £14 million ($24 million) through a share placement on the LSE.
Shares in Po were up 6 per cent at 5.3 cents each at 320pm AEDT.