San Leon Buys Turkish Assets to Fund Polish Shale DrillingBrian Swint
San Leon Energy Plc, a U.K.-listed oil and gas explorer focused on shale in eastern Europe, bought three-quarters of Alpay Enerji AS to support drilling in Poland.
The $4 million deal will give San Leon a stake in 16 conventional oil licenses in Turkey and should generate $3 million a month for the company from next year, it said in a statement in London. Separately, the explorer is raising 31 million pounds ($50 million) in a share placement.
Exxon Mobil Corp., Marathon Oil Corp. and Talisman Energy Inc. have withdrawn from shale exploration in Poland after the first wells failed to produce commercial finds. The country is sitting on the European Union’s biggest shale-gas reserves, enough to last at least 50 years and free the nation from dependence on Russia, the Polish Geological Institute says.
“San Leon can be the last man standing on Polish shale plays, it won’t matter if it happens this year or later on” thanks to the deal, Chairman Oisin Fanning said. “Turkey is a very attractive market where we’ll have proven reserves and can monetize them very quickly. We’ll get to where we’ll be properly funded on our own cash flow and not be under pressure.”
The stock fell 7.6 percent, the most since May 21, to 5.08 pence in London.
San Leon’s share placing was oversubscribed and the company will soon announce new institutional investors backing it, Fanning said. Placing shares will be sold at a 13.6 percent discount to yesterday’s closing price of 5.5 pence and Fanning will buy about 1 million pounds of the stock himself.
“We’re very pleased with the placing because it’s a difficult market,” he said in a telephone interview.