Petroneft close to farm-out on licence at Russian oilfield
PETRONEFT is close to securing a farm-out deal on one of its oil licences in Russia, the company has said, avoiding action by creditor Macquarie Bank.
The deal should cover a substantial portion of the costs of developing License 61, which it owns and operates in Tomsk Oblast in the Russian Federation.
The oil and gas explorer will execute a binding legal agreement to farm-out the licences within the next week, in exchange for a 50pc stake, the company said in a statement yesterday.
Macquarie Bank has been advised of this timetable, it said. Macquarie had the right to ask for the licence to be put up for sale if a farm-out deal was not concluded by yesterday. Shareholders will be updated fully once the agreements are signed
Petroneft's share price closed up 5pc to 7c following the statement.
The news comes after the rejection in late March of a deal tabled by Petroneft's biggest shareholder, who wanted an increased stake in the company in exchange for taking on a significant amount of the firm's debt. This would have negated the need for a farm-out deal.
Delays in the farm-out agreement forced the company to borrow €4.8m in March to fund the development of the Russian oilfield. The proceeds were used for the purchase and delivery of supplies and equipment to License 61, where work must be completed while winter roads are still passable if the project is to continue as scheduled.