Island Oil sells Dutch assets
Shares in Island Oil and Gas were wanted Monday morning after the Irish AIM-listed company said it is to sell its Island Netherland BV unit to Delta Hydrocarbons for $25m.
Island Netherlands BV's assets include an 83.33% interest in the Q13a production licence, which contains the undeveloped Amstel Oil Field, and its 100% interest in the recently awarded Q13b exploration licence, covering the shallow part of the licence and including the undeveloped Zaan oil field and several appraisal and exploration prospects.
In addition to the cash payment, Delta will advance $10m to Island Oil and Gas which will be repaid from an Overriding Royalty Interest ("ORI") granted to Island’s fully-owned subsidiary Island Oil & Gas BV for the Amstel and Zaan oil fields.
Island has committed to repay in cash or shares any shortfall should the royalty payments ultimately fail to cover the advance.
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Proceeds from the sale will be used to provide fresh working capital and to repay the existing £12m RMB loan facility in full. RMB has agreed to provide Island with a new £5m loan facility for a 12-month period.
Referring to the disposal, Paul Griffiths, Island’s chief executive said: “We have achieved a significant uplift in value through the process of acquisition, development and subsequent sale.”
“Additionally we retain the potential for future cash flow from production through our royalty arrangements with Delta and Encore,” Griffiths added.
