LGO Energy plc (LSE AIM: LGO) has provided an update on its strategy review, originally announced on 3 November and updated on 7 December 2015 to include a possible sale or third party merger within the context of a formal sale process (FSP).
In early November 2015, the ompany engaged Wellford Capital Markets, LLC and Height Securities, LLC to investigate sources of funding in the USA and elsewhere, and in December 2015 the LGO Board decided to widen the scope of the company's search for future funding options through reviewing strategic partnerships, asset sales, mergers and potential offers for the company in a FSP as defined by the Takeover Code.
Having considered the options available, the Board has decided to terminate the FSP with immediate effect. The Board believes that the other strategic refinancing opportunities available represent the best approach for the Group and the Board now intends to focus exclusively on those funding routes.
Separately, the company has today initiated an expansion of the ongoing program of well work in the Goudron field designed to increase production progressively over the next two months by accessing opportunities to recomplete wells, including from the 2014 and 2015 drilling campaigns, where there is known oil pay that has, as yet, not been placed on production. This work will be funded through service income in the company's Trinidadian subsidiary, Columbus Energy Services Limited, which has the flexibility to deploy its free cash flow independent of restrictions currently faced by Goudron E&P Limited. Further details of this programme will be announced in the coming weeks.
Neil Ritson, LGO's Chief Executive, commented:
"The company has now moved to focus on specific funding options that have been identified and as a result has chosen to end the FSP. The company is discussing refinancing options that the Board consider present the best approach for the Group as a whole. In light of stabilising oil prices the company has also agreed to commence additional work designed to increase production at the Goudron Field."
Adapted from a press release by Louise Mulhall
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