Coro Energy PLC (LON: CORO) have announced that they will sell their entire Italian gas portfolio to Zenith Energy Ltd (LON: ZEN) in an announcement made on Tuesday morning.
Shares in Coro Energy fell 4.58% after the announcement to 1.98p, whilst Zenith shares received a 3.11% boost to trade at 2.32p. 3/12/19 11:54BST.
The deal which has been formalized on Tuesday will value at £3.9 million, which led to the reflections in share price movements for both firms.
The initial consideration for the Italian natural gas production and exploration portfolio is £400,000, payable by Zenith to Coro in the form of 6.7 million new Zenith shares priced at 6.0 pence each.
Then, provided the portfolio achieves average daily production of 100,000 standard cubic metres per day on average for four successive months, a up to £3.5 million in Zenith shares will be due to Coro. This production figure represents approximately 590 barrels of oil equivalent per day.
Coro Chief Executive James Menzies said: “As the company continues to focus on the investment opportunities in south east Asia, the disposal of our Italian portfolio removes non-core assets and streamlines our geographic focus. The Italian portfolio requires significant management time and capital expenditure to sustain its production and in-line with our stated strategy, we believe that focusing our resources on the rapidly growing south east Asian market will provide greater opportunity to maximise shareholder value.”
Coro’s Italian operations consist of 100% working interests in four natural gas producing concessions, which are Sillaro, Rapagnano, Casa Tiberi and Bezzecca – as well as one which is development ready and two exploration concessions.
Following “a series of targeted interventions” over the next six to nine months, Zenith expects production from the portfolio to reach 113,000 standard cubic metres per day.
The deal will make Zenith one of Italy’s largest natural gas production operations with total production at 55,000 cubic meters per day.
Zenith CEO Andrea Cattaneo said: “There are a number of opportunities to increase production from current levels in the acquired assets through targeted relatively low-risk well interventions, also present in our existing Italian portfolio. Our newly enhanced technical team and financial resources will enable Zenith to apply renewed focus on its Italian portfolio.”
Separately, Coro announced it is seeking another six-month extension to the long-stop date on its attempted acquisition of a 43% interest in the Bulu production sharing contract offshore East Java.
Operations in the EU gas industry have been faltered over the last few weeks following fracking legislation, and both parties will need to get full regulatory clearance for the deal to happen.