TIDMUPL
RNS Number : 0984Q
Upland Resources Limited
24 November 2016
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN
This announcement is an advertisement and not a prospectus. This
announcement is not an offer for sale, or a solicitation of an
offer to acquire, securities in any jurisdiction, including in or
into the United States, Canada, Australia, or Japan. Investors
should not subscribe for or purchase any transferable securities
referred to in this announcement except on the basis of information
in the prospectus (the "Prospectus") to be published by the Company
in connection with the Placing and the Wressle Farm-in Agreement as
referred to in this announcement.
24 November 2016
UPLAND RESOURCES LIMITED
("Upland" or the "Company")
Proposed Farm-ins to 10% Interests in PEDLs 180 & 182
(including the Wressle Field)
Proposed Placing of 169,230,770 Placing Shares to raise GBP2.2
million
Upland Resources Limited (LSE: UPL), the oil and gas company
actively building a portfolio of attractive upstream assets, is
pleased to announce that its wholly-owned subsidiary, Upland
Resources (UK Onshore) Limited ("Upland UK"), has entered into a
conditional agreement for the farm-ins by Upland UK (by way of
assignment from Europa Oil & Gas Limited ("Europa Oil &
Gas")) to a 10% interest in each of UK onshore petroleum
exploration and development licences ("PEDLs") 180 and 182 for an
aggregate consideration of GBP1,600,000 on completion and a further
contingent consideration of GBP250,000 contingent on a level of
production from Wressle Field (the "Wressle Farm-in Agreement")
which lies within the licence areas. First commercial oil
production from Wressle is expected to flow at an estimated
constrained rate of 500 barrels of oil per day gross early in 2017.
The licences also contain the Broughton North Prospect situated in
PEDL182.
Completion of the agreement entered into between Europa Oil
& Gas and Upland UK in respect of the Wressle Farm-ins (the
"Wressle Farm-in Agreement") is subject to Oil and Gas Authority
("OGA") approval of the interest assignments, OGA approval of the
Wressle Field Development Plan, as well as receipt of approvals of
certain planning applications and an environmental permit
variation.
In addition, the Company announces that it has conditionally
placed 169,230,770 new shares of no par value in the Company (the
"Placing Shares") with institutional and other investors at 1.3p
per share (the "Placing Price") to raise GBP2,200,000 (before
expenses). These funds, when combined with the Company's existing
cash reserves, will be used to fund the cash the consideration
payable by Upland UK under the Wressle Farm-in Agreement and to
finance future work on PEDLs 180 and 182, Upland UK's share of
funding work on its existing stake in Hardstoft (PEDL 299), on new
ventures and on the ongoing costs of running the business.
In addition to new and existing institutional and private
shareholders and the founding shareholders, as part of the Placing,
each of the Directors (Norza Zakaria, Steve Staley, Jeremy King and
Bolhassan Di) has subscribed for 56,692,302, 3,461,538, 769,230 and
3,846,160 Placing Shares (respectively).
Highlights:-
-- Substantial, very near term cash flow from proven reserves to
underpin Upland's growth and realisation of first phase of Upland's
strategy
-- Attractive risk:reward profile - relatively low risk, low cost production
-- Wressle discovery well has successfully flowed oil from three
separate reservoirs totaling 710 boepd
-- Substantial additional cashflows on increase in production
possible from new development drilling activity
-- Significant exploration upside potential in the Broughton North prospect
Upland Resources CEO, Stephen Staley. commented:-
"The very near term production and potentially substantial
cashflows provided by this excellent asset will underpin Upland's
strategy for growth built upon strong foundations. Upland has a
two-phase strategy: Phase 1 is to acquire interests in lower risk,
economically robust assets that offer near term production, Phase 2
is to add higher risk, higher impact opportunities. Phase 1 assets
have now been put in place, Phase 2 is well underway with projects
under active assessment in Morocco, Malaysia and elsewhere.
Wressle Field is probably the nearest term new onshore UK
production opportunity, the well to support initial production from
the reserves in the Ashover Grit and Wingfield Flags Formations
having already been drilled. It benefits from robust economics
which provide for a good margin even in a low oil price
environment, whilst allowing leverage to higher oil prices. Initial
production of an estimated 50 bbl/day net to Upland from the
Wressle discovery is expected early in 2017 with additional,
contingent resources in the Penistone Flags Formation and further
potential upside in the Broughton North prospect located in a fault
block immediately to the north west of the Wressle structure.
As reflected in our GBP2.2 million fundraising, a great deal of
which was supported by existing shareholders and the Directors of
the Company, adding low cost production to any portfolio is very
attractive. New funds, existing cash and significant net cash
inflows expected to be generated from commercial production from
the initial Wressle development should put Upland in a strong
financial position."
PEDLs 180 & 182
The Wressle oil and gas discovery is in North Lincolnshire and
lies within PEDL 180 and PEDL 182, approximately six miles to the
east of Scunthorpe. Edgon Resources U.K. Limited ("Egdon
Resources"), as operator, drilled Wressle-1 in 2014 and in extended
well test operations carried out in 2015, the well successfully
flowed oil and gas from three separate reservoirs: the Ashover
Grit, the Wingfield Flags and the Penistone Flags. This totaled 710
boepd from all zones.
Edgon Resources has submitted a planning application to North
Lincolnshire Council for the retention of the Wressle site and
development of an oil production site and has also submitted an
environmental permit application which was published in June 2016.
A planning application to enable the drilling of water monitoring
boreholes at the Wressle site (required by the environmental
permit) has also been submitted.
In September 2016, Egdon Resources (as operator) submitted a
Field Development Plan ("FDP") over the Wressle Field Determination
Area to the OGA. This is currently awaiting approval by the
OGA.
The outcomes of these applications are expected in the near
future and their positive outcomes are conditions precedent to
completion of the Wressle Farm-in Agreement. However, Upland UK has
the right to waive these conditions precedent.
Upland UK will be responsible for its 10% share of the costs
associated with PEDLs 180 and 182. These include the annual licence
rental fees, ongoing studies, engagement with relevant regulatory
bodies and the costs of bringing the hydrocarbon resources into
production. The first stage of the latter brings the Wingfield
Flags and Ashover Grit Formations within Wressle into production
and this work is expected to commence at the end of 2016 or in the
first two months of 2017.
At a later stage the Penistone Flags reservoir is planned to be
brought onstream.
The Broughton North Prospect provides exploration upside and is
undrilled; it is likely to represent the third stage of development
of the area.
The existing licensees in respect of PEDLs 180 and 182 are Egdon
Resources (a wholly-owned subsidiary of Egdon Resources plc),
Celtique Energie Petroleum Ltd. and Union Jack Oil plc, in addition
to Europa Oil & Gas itself.
The interests held in both PEDL 180 and PEDL 182 on completion
of the Wressle Farm-in Agreement will be:-
Egdon Resources U.K. Limited
(Operator) 25%
=============================== =======
Celtique Energie Petroleum
Ltd. 33.33%
=============================== =======
Europa Oil & Gas Limited 20%
=============================== =======
Union Jack Oil plc 11.67%
=============================== =======
Upland Resources (UK Onshore)
Limited 10%
=============================== =======
Competent Person's Report
A Competent Person's Report ("CPR") in respect of, inter alia,
the Wressle Discovery and Broughton North Prospect has been
prepared by Blackwatch Petroleum Services Limited ("Blackwatch").
The oil and gas reserves and resources identified by the CPR are as
follows:-
Gross 2P reserves across the Ashover Grit and Wingfield
Flags:-
-- 0.62 million stock tank barrels of oil (Justified For
Development) - forming the basis for initial Field Development Plan
('FDP')
-- 0.20 billion standard cubic feet of gas (Justified For
Development) - monetisation via on-site power generation with
excess power sold into the National Grid
Gross 2P reserves in the Penistone Flags:-
-- 1.53 million stb of oil and 2.0 billion standard cubic feet ("Bscf") of gas
Prospective P(mean) unrisked recoverable resources for Broughton
North
-- Mean Prospective Resources of 0.51 million stb of oil plus
0.51 billion standard cubic feet of gas.
A high geological chance of success of 40% to 49% has been
assigned by Blackwatch to Broughton North, which is in a fault
block immediately to the north-west of the main Wressle
structure.
Reasons for the Wressle Farm-ins
The reasons for acquiring an interest in PEDLs 180 and 182
include:-
-- proven and contingent resources;
-- near term revenues;
-- significant exploration upside;
-- good commercial terms;
-- an attractive risk : reward profile, as much of the risk has
been removed by prior 2D and 3D seismic and drilling;
-- competent partners; and
-- a stable regulatory regime with falling taxation rates and political stability.
Wressle Farm-in Agreement
- Consideration
The total consideration payable by Upland UK in respect of the
Wressle Farm-ins is GBP1,600,000 on completion - as to GBP1,300,000
in cash and GBP300,000 to be satisfied by the issue of 23,076,923
new shares of no par value in the Company (the "Initial
Consideration Shares"). In addition, a further contingent
consideration of GBP250,000 is payable by Upland UK to Europa Oil
& Gas to be satisfied by the issue of 19,230,769 new shares of
no par value in the Company (the "Contingent Consideration Shares")
contingent on a level of production from the Wressle Field
Determination Area - more particularly, cumulative production from
the Penistone Flags Formation on either PEDL 180 or PEDL 182 or the
Broughton North prospect (or a combination of the two) of in excess
of 30,000 bbls of oil net to Upland UK being achieved by 30 June
2025.
On completion of the Placing, Upland UK has agreed to pay a cash
deposit to Europa Oil & Gas of GBP160,000 (to be set off on
completion of the Wressle Farm-in Agreement against the
GBP1,300,000 cash consideration). Such deposit is to be immediately
returned in full to Upland UK if the Wressle Farm-in Agreement is
terminated by either party where any of the conditions precedent to
completion of the Wressle Farm-in Agreement (as set out below) have
not been satisfied or fulfilled before 31 March 2017 (except where
failure to complete is a direct consequence of a material breach by
Upland UK of the Wressle Farm-in Agreement).
- Conditions
Completion of the Wressle Farm-in Agreement is conditional on,
inter alia:-
(a) consent of the OGA to the transfer of the 10% participating
interests in each of PEDLs 180 and 182 to Upland UK pursuant to the
Wressle Farm-in Agreement;
(b) approvals having been received from the OGA of the Wressle
Field Development Plan (the "Wressle FDP"), from North Lincolnshire
Council of the relevant planning applications and from the
Environment Agency of an environmental permit variation
application, to enable and implement Phase 1 of the Wressle
development (as described in more detail in the Wressle FDP),
unless in any such case waived by Upland UK;
(c) none of the licensees of PEDLs 180 and 182 withdrawing their
support of, and financial commitment to, the Wressle FDP (following
submission of such licensees' letters of support to the OGA, as
included in the Wressle FDP), unless in any such case waived in
writing by Upland UK;
(d) completion of the Placing;
(e) admission of the Placing Shares to listing on the UK Listing
Authority's Official List (standard listing segment) and to trading
on the London Stock Exchange's main market for listed securities
("Admission") becoming effective.
It is not anticipated that completion of the Wressle Farm-in
Agreement will complete before 15 December 2016.
Applications will be made to the UK Listing Authority and to the
London Stock Exchange for the Initial Consideration Shares to be
admitted to listing on the Official List (standard listing segment)
and to trading on the London Stock Exchange's main market for
listed securities as soon as practicable following) completion of
the Wressle Farm-in Agreement.
If completion of the Wressle Farm-in Agreement has not taken
place before 31 March 2017, either Upland UK or Europa Oil &
Gas may terminate the Wressle Farm-in Agreement by not less than 7
days' notice to the other.
- Lock-in and orderly market arrangements
Under the Wressle Farm-in Agreement, Europa Oil & Gas has
agreed that it will not (subject to certain limited exceptions)
dispose of or otherwise transfer any of (or any interest in) the
Initial Consideration Shares prior to the later of (a) the date
being six months after completion of the Wressle Farm-in Agreement
and (b) the date of first export of oil from the 'Wressle site' (as
described in more detail in the Wressle Field Development Plan)
under a production licence (subject to a 'long stop' date of 1
September 2017) (such later date being the "Lock-in Expiry
Date").
In addition, under the Wressle Farm-in Agreement, Europa Oil
& Gas has agreed that any disposal of any of, or any interest
in, the Initial Consideration Shares after the Lock-in Expiry Date
shall be effected through the Company's brokers from time to time
(subject to certain provisos).
No such lock-in or orderly market arrangement has been entered
into by Europa Oil & Gas in relation to the Contingent
Consideration Shares to be issued to Europa Oil & Gas.
The Placing
In order to fund the GBP1,300,000 cash consideration payable by
Upland UK on completion of the Wressle Farm-in Agreement, the due
diligence, and other transaction costs in respect of the Wressle
Farm-in Agreement, Upland UK's share of the capital costs of future
exploration, appraisal and development of PEDLs 299, 180 and 182
and to pay the fees and expenses of the Placing and Admission, the
Company has entered into a placing agreement (the "Placing
Agreement") with its broker, Optiva Securities Limited ("Optiva
Securities") for the placing of 169,230,770 new shares of no par
value in the Company at the Placing Price of 1.3p per share to
raise GBP2,200,000 (before expenses) for the Company (the
"Placing").
Whilst the Placing is being carried out principally to provide
Upland UK with the cash consideration payable on completion of the
Wressle Farm-in Agreement, due to the anticipated timing for
completion of the Wressle Farm-in Agreement (as referred to above),
the Placing is not conditional on completion of the Wressle Farm-in
Agreement.
Under the Placing Agreement, Optiva Securities has agreed,
subject to certain conditions, to use its reasonable endeavours to
procure subscribers for all the 169,230,770 Placing Shares at the
Placing Price. The Placing Agreement does not include any
underwriting obligation.
The Placing will only be completed if the full GBP2,200,000
(gross) is raised.
- Conditions
Completion of the Placing Agreement is conditional upon, inter
alia, the following conditions being satisfied or fulfilled on or
prior to 1 December 2016 (or such later date as the Company and
Optiva Securities may agree, being not later than 16 December
2016):-
(a) the obligations of Optiva Securities not being terminated
before Admission in accordance with its termination rights in the
Placing Agreement;
(b) Optiva Securities being satisfied that it has received in
immediately available cleared funds, prior to 12.00 noon on 30
November 2016, all cash to be paid as contemplated by the Placing
Letters by placees (if any) intending to subscribe for their
Placing Shares in certificated form; and
(c) Admission in respect of the Placing Shares.
Optiva Securities may terminate the Placing Agreement (and the
arrangements associated with it) at any time prior to Admission in
certain circumstances (including for a material breach of
warranty). If this right is exercised, the Placing will lapse and
any monies received in respect of the Placing will be returned to
applicants (without interest) by Optiva Securities.
- Directors' participation
Each of the Directors is participating in the Placing and
subscribing for the following numbers of Placing Shares:-
Director No. of Placing Aggregate Placing
Shares Price
=============== =============== ==================
Stephen Staley 3,461,538 GBP45,000
=============== =============== ==================
Norza Zakaria 56,692,302 GBP737,000
=============== =============== ==================
Bolhassan Bin 3,846,160 GBP50,000
Haji Di
=============== =============== ==================
Jeremy King 769,230 GBP10,000
=============== =============== ==================
Admission, Settlement and Dealings in Placing Shares
Completion of the Placing is conditional on, inter alia,
Admission occurring on or before 1 December 2016 (or such later
date as may be agreed by the Company and Optiva Securities, being
not later than 16 December 2016).
Applications will be made to the UK Listing Authority and to the
London Stock Exchange for all the 169,230,770 Placing Shares
proposed to be issued on completion of the Placing to be admitted
to listing on the Official List (standard listing segment) and to
trading on the London Stock Exchange's main market for listed
securities. It is expected that Admission will become effective,
and that dealings in the Placing Shares will commence, at 8.00 a.m.
on 1 December 2016.
The rights attaching to the Placing Shares will be uniform in
all respects and all of the Placing Shares will rank pari passu,
and form a single class for all purposes with, the existing issued
shares of no par value in the Company.
Prospectus
Copies of the Prospectus to be published by the Company in
connection with the Placing and the Wressle Farm-ins, which
includes the CPR prepared by Blackwatch, will be published on the
Company's website at http://www.uplandres.com and hard copies will
also be available at the offices of the Company's financial
adviser, broker and placing agent, Optiva Securities Limited, 2
Mill Street, Mayfair, London W1S 2AT.. The Prospectus will also be
available at the FCA's Document Storage Mechanism at
http://www.morningstar.co.uk/uk/NSM.
This announcement contains inside information for the purposes
of Article 7 of the Regulation (EU) No 596/2014 on market abuse
Contact details:-
Upland Resources Limited www.uplandres.com
============================ =========================================================
Steve Staley, CEO Tel: 07891 677 441
s.staley@uplandres.com
============================ =========================================================
Optiva Securities Limited www.optivasecurities.com
============================ =========================================================
Jeremy King (Corporate Tel: 020 3137 1904
Finance) jeremy.king@optivasecurities.com
============================ =========================================================
Christian Dennis (Corporate Tel: 020 3411 1882 christian.dennis@optivasecurities.com
Broker)
============================ =========================================================
FlowComms Ltd www.flowcomms.com
============================ =========================================================
Sasha Sethi (Investor Tel: 07891 677 441
Relations) sasha@flowcomms.com
============================ =========================================================
Notes
Upland is an upstream oil & gas company whose highly
experienced management has a track record of creating major value
for shareholders in junior oil & gas companies, including Cove
Energy plc. The Company has extensive technical and commercial
skills and contacts, management having held senior roles in
Petronas, Conoco, Shell etc. Upland is taking advantage of the low
oil price to acquire quality upstream assets on attractive
terms.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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