MX Oil surges on Nigerian offer

Mexico-focused MX Oil has received an offer for its Nigerian assets that values them at "several multiples" of the entire company's market capitalisation.

The AIM-listed company, which had been intending to raise funds through a share placing to bring its Nigerian licence into production, initially revealed acquisitive interest for the asset last week.

On Monday, it revealed a formal offer and term sheet had been received from "a credible third party" to acquire the whole of its Nigerian investment, which is the OML 113 licence covering an area of 835 sq km offshore Nigeria close to the Benin border and holds the Aje field as well as a number of exploration prospects.

"The directors believe that selling its investment on these terms, if completed, would be more attractive to shareholders than raising equity to fund its investment to first oil at the current share price."

Management therefore will continue talks with the potential buyer but said it will keep the placing, which was on the verge of closing last week, on the back burner as any sale would still need to pass through the due diligence process.

It said the placing now "may or may not be within the price range or for the amount previously stated".

Chief executive Stefan Olivier said: "Our Nigerian investment is now close to oil production and even in the current oil price environment, it has a significantly greater value than that implied by our current share price and valuation. We are committed to delivering the best funding option or asset transaction possible in the time available and expect to make further announcements to the market in due course."

Shares in MXO rocketed 164% higher to 1.58p, still well below the 2.5p at which it ended 2015 and 12-month highs nearer 5p.