Mosman Oil and Gas rallies as it sells royalty to help fund acquisition

Mosman Oil and Gas has sold a royalty to help fund its proposed acquisition of up to a 70% interest in the South Taranaki Energy Project.

Mosman said it has agreed to sell a 2% royalty to Canada-based Ridge Royalty Corp for NZ$4m, or around £1.68m. As well as the STEP royalty, the company has granted Ridge a right to first refusal for a two-year term to acquire similar royalties on its ten other current oil and gas projects in Australia and New Zealand.

It said the sale provides funding for 40% of the purchase of STEP and does not involve any share dilution or debt. In addition, the company is also actively negotiating other funding alternatives to finance the balance.

Chairman John W Barr said: “We are delighted to have secured a large proportion of the funding for the STEP Acquisition, one which the board sees great value in and believes will be transformational for Mosman. “

The total consideration for the STEP acquisition is NZ$10m, or around £4.2m to be paid in two tranches following the 5% deposit which was paid by Mosman in early September.

At 1026 BST, Mosman shares were up 21% at 7.85p.