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Longreach Combines With Apic to Finance Morocco Gas Exploration

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Oct. 2 (Bloomberg) -- Longreach Oil & Gas Ltd., a U.K. exploration company focused on Morocco, will combine with Apic Petroleum Corp. in a deal that will finance Longreach’s drilling operation in the North African country.

Apic, a Canadian explorer which has so far been focused on east European properties, will undertake a $30 million private placement before merging with Longreach in an all-share transaction. Longreach plans to use the capital to start drilling in Sidi Moktar, eastern Morocco, where it operates three blocks estimated to hold 292 billion cubic feet to 776 billion cubic feet of gas, the company said in a statement.

“Morocco is hugely under-explored, but geologically it has significant potential that has been previously overlooked by the industry,” Andrew Benitz, who will become chief executive officer of the combined company, said in a phone interview. “As we’re one of the first international companies to come into the country, of course we were able to get the best acreage.”

Longreach plans to start drilling early next year in Sidi Moktar, situated in the Essaouira Basin west of Marrakesh and one of its five onshore and offshore licenses in Morocco.

“We have the benefit of an existing pipeline that goes straight to our license up to the phosphate mines that have a tremendous amount of gas” demand, Benitz said. “We are getting gas prices of between $8 to $10 so it is a highly economic project for us.”

Apic, which was interested in buying exploration properties in Albania that “did not yield any results,” will issue the new shares at a price of 13 Canadian cents, below last year’s average share price of 18 Canadian cents, data compiled by Bloomberg show.

Apic investors will have a 53 percent stake in Longreach at the end of the transaction, according to a statement, with current Longreach shareholders keeping a 29 percent stake.

“It’s a classic example of one company having the assets and the other company having the cash and the two together allow the assets to be developed,” Benitz said.

To contact the reporter on this story: Roxana Zega in London at rzega@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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