Mosman Oil sells Welch Project at 40pc premium

Exploration, development and production company Mosman Oil and Gas has signed a binding contract for the sale of the Welch Project in Texas for $0.42m (£0.24m) in cash, it announced on Monday, with Steadfast Energy Partners and Silver Dollar Energy Investments at a 50-50 share.

The AIM-traded firm said closing of the transaction was scheduled for 15 January.

It said that, while the Welch field was producing, the ranking of projects in its strategic review prioritised assets with lower operating costs, including the projects in East Texas.

The sale would result in a surplus over the current carrying value of $0.08m, with the capital realised to facilitate investment in the company’s target growth areas.

Its board said the Welch Project contributed a gross profit of AUD 0.23m (£0.13m) in the year ended 30 June, with its carrying value at the end of June standing at AUD 0.5m.

“The intention to sell Welch was first announced in February 2020, and a sale contract was signed in March, however despite time extensions, the counter-party did not complete that sale contract,” said chairman John Barr.

“We are pleased to have secured a new sale agreement at a 40% premium.”

Barr described Welch as a “valuable stepping-stone” for Mosman in terms of experience and building a production base in the United States, while it built a position in East Texas.

“The sale of Welch will enable management to focus on further development of the projects where we see strong near-term development potential.”

At 0918 GMT, shares in Mosman Oil and Gas were flat at 0.15p.