Shares in Fanning oil firm tank as Turkish deal sours
Shares in Oisin Fanning's €100m valued London-listed San Leon Energy tanked last week as the shale oil firm pulled out of a deal to buy a stake in Turkish oil and gas production group Alpay.
"A decision has been made not to proceed with the share purchase agreement between San Leon and Alpay/Server Fatih Alpay relating to 75 per cent of Alpay, originally announced in September 2013," according to Fanning's company.
San Leon added that its capital will be better spent in Poland, particularly in the Baltic Basin. Fanning's company believes that its operations in Poland could deliver cash flow and production sooner than expected following recent new partnership arrangements.
It is understood that lengthy delays in gaining Turkish regulatory approval for the deal coupled with the weak Turkish lira ultimately scuppered the deal. Technical issues at Alpay's Hamam-1 well were also cited.
In September 2013, San Leon announced that it entered into an agreement conditionally to buy 75 per cent of Alpay from Server Fatih Alpay for around €4m, with the bulk of the money payable on completion.
Fanning, the former MMI Stockbrokers and Smart telecoms boss, rebuilt his career as an oil company chief after a series of reverses. His San Leon Energy attracted a number of seriously heavy hitting investors including George Soros and Stephen Schwarzman's vast BlackRock group. Hedge fund Tosca also has a 20 per cent stake.
Last January, San Leon revealed that a "major milestone" had been passed as testing at one of its Polish wells was successful. This means that the company may be set to deliver Europe's first gas "fracking" production . Natural gas flowed from its Lewino well in a shale formation in the Baltic Basin in northern Poland at as much as 60,000 cubic feet per day during the testing.
London broker FinnCap suggested that San Leon's fracking projects are the most advanced in Europe in a report last week.
Dougie Youngson, oil and gas analyst at finnCap, said an upcoming multi-frack programme in a horizontal well has the potential to be a "company maker".
Sunday Indo Business