Anglo African Oil & Gas PLC (LON:AAOG) confirmed that it has now entered into the recently agreed ‘put and call’ option agreement to potentially sell its residual 20% stake in its Congo subsidiary, which holds a 56% interest in the Tilapia field.
It follows the signing of a term sheet earlier this month.
The call option sets out sale terms whereby Zenith will pay £1mln for the 20% stake in the business, should Tilapia production never exceed 2,000 barrels of oil per day over 30 consecutive days before 15 January 2021.
But, if Tilapia produces an average of 4,000 bopd or over for 30 consecutive days before the same deadline, then Zenith will be required to pay £2.5mln for the 20% stake.
Zenith in late December agreed to acquire 80% of the Anglo African Oil & Gas Congo subsidiary for £1mln, including £500,000 of cash.
Also, Zenith will fund Anglo African’s (AAOG's) share of a US$5.5mln work programme on Tilapia and will fund the upfront cash element of any signature bonus payable for the new licence negotiated with the Congolese Ministry of Hydrocarbons.
AAOG will use the funds to cover its day-to-day operations and to conduct due diligence over reverse takeover transactions that present themselves once the company is a cash shell.