Hague and London Oil to buy Dutch production licences

AIM-listed Hague and London Oil has agreed the conditional acquisition of "significant" non-operated natural gas production assets in the Dutch North Sea from Tullow Netherlands Holding Coöperatief B.A. for an initial consideration of €9.75m.

The seller will also receive contingent payments of up to €20m payable between 1 January 2019 and 1 January 2021.

The assets will be bought through the company's wholly-owned subsidiary, Hague and London Oil B.V. It will acquire Tullow 101 and its two subsidiaries, Tullow Exploration & Production B.V. and Tullow Exploration & Production Netherlands B.V.

The deal comprises interests in a suite of offshore exploration and production licences on the Dutch Continental Shelf within the Northern Area and Joint Development Area in the western part of the DCS, which collectively generated total net production of 2,900 barrels of oil equivalent per day in 2016.

Hague is currently in discussions with potential finance providers to agree the terms of funding for the completion payment pursuant to the terms of the acquisition, whilst minimising dilution to shareholders. Further details of the financing arrangements will be announced "at the appropriate time" and once any binding agreement is entered into.

Hague noted that since its combination with Wessex Exploration in 2014, it has been on a slow but steady path to transform the company into a lower-risk, successful exploration and production player.

It said the prolonged market downturn has hit its sector very hard and has impacted its efforts to diversify and grow the portfolio sooner.

Chairman and chief executive Andrew Cochran said: "We have therefore been focused, disciplined and persistent in our implementation of the announced strategy, and today's proposed acquisition is the culmination of the company's dedication to deliver within the stated objectives and a cost-effective manner. These are high-quality, cash generative assets with significant upside potential, in a mature basin with existing infrastructure and commercialisation routes - which have been the critical factors in our screening process and are also likely to be key in agreeing the funding of the acquisition.

"We are looking forward to integrating this portfolio into HALO to continue on the future growth trajectory. This will fully complete the corporate transition to what we had longed planned for the company."

At 0847 BST, the shares were down 1.6% to 11.94p.