Enwell Energy agrees partial early payment for Arkona

The AIM-traded firm said the well, with a target depth of 5,565 metres, was primarily an appraisal well, targeting production from the V-22 horizon, as well as exploring the V-16 and V-21 horizons in the Visean formation.

Drilling operations were scheduled to be completed in mid-2022.

In addition, the company said it had agreed to a variation to the payment terms for the acquisition of Arkona Gas-Energy, which holds the SC Licence, and which it acquired in March 2020.

The firm acquired a 100% shareholding in Arkona for total consideration of up to $8.63m, comprising a first tranche of $4.32m on completion, a second tranche of $2.16m payable on satisfaction of certain conditions, which had now been satisfied, and a third tranche of $2.16m payable after 12 months from payment of the second tranche.

“The agreement for the acquisition contains representations, warranties and indemnities, which are customary for this type of transaction and entitle the company to defer consideration payments or seek recovery of previously-paid tranches of consideration in the event of a breach of the acquisition agreement,” Enwell’s board said in its statement.

“The second tranche of the consideration was paid in March, and consequently, the third tranche is payable in March 2022.”

However, it said that in recognition of the progress made towards the start of exploration and appraisal of the SC licence, and the fact that the second tranche of the consideration became payable later than originally expected, the company and the vendors of Arkona had agreed to an early payment of 25% of the third tranche of the consideration, totalling $0.54m.

“Accordingly, a deed of variation to the acquisition agreement has been entered into by the company and such vendors to reflect this variation.”