Shares in small cap oil and gas firm San Leon Energy (SLE:AIM) have jumped by nearly 50% to 35.85p as the stock resumes trading on AIM.

The company has decided not to go ahead with a merger with Nigeria’s Midwestern Oil & Gas, a deal which would have represented a reverse takeover under AIM rules and therefore led to the suspension of the shares in November 2017.

The company had a deadline of 3 May to either resume trading or risk seeing its shares permanently delisted.

The big advance in the stock reflects investors’ first chance to respond to a drastic improvement in the company’s financial position, a materially higher oil price and other progress in the interim period.

CASH IN HAND

Boosted by loan repayments linked to its interest in the Nigerian OML 18 field, a complex transaction had seen the company become the beneficial owner of $175m in loan notes. Due to delayed cash flow from the field it had not received money it was owed.

Its accounts for 2016 were delayed and when they were finally published in September 2017 auditors noted there were ‘material uncertainties which may cast significant doubt’ about its ability to continue as a going concern.

A series of quarterly payments $19m have helped restore its finances such that it now has $13.5m cash balance. It has also settled a dispute over a Polish gas field with Dutch firm Avobone; and arranged a capital reorganisation to pave the way for distributions to shareholders.

FARM-OUT BOOST

Finally, its 4.5% interest in the Barryroe discovery offshore Ireland benefited from operator Providence Resources (PVR:AIM) finding a farm-out partner, in the form of a Chinese consortium, to progress the asset.

 

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Issue Date: 23 Apr 2018