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London-listed independent Soco on 2 April completed the purchase of Houston-based Merlon International for $207mn. This consists of $136mn in cash with the remainder in Soco shares equivalent to 19.75% of Soco’s total issued share capital – around $71mn given Soco’s current market cap of £274mn ($359mn).
Soco’s share price, and thus the value of the deal, has fallen since it was initially announced (at $215mn) last September ( MEES, 21 September 2018 ).
Merlon’s sole assets are in Egypt with the firm’s only production coming from the El Fayoum concession south of Cairo. Here output has been on the slide. Production from the concession’s 10 fields averaged 5,692 b/d in Q1 down from 7,900 b/d for 2017. But Soco has ambitious plans to hike output to 15,000 b/d by 2023. The initial focus will be on “offsetting the recent decline and then growing producing through additional drilling and the implementation of a secondary recovery program.” Soco says it is adding a second well from next month and a third, which will focus on wildcat exploration drilling, from October. The firm has “50 identified prospects and leads” on the block. (CONTINUED - 327 WORDS)