Merlon will significantly diversify the SOCO business adding Egypt as a new base from which to build a MENA portfolio. The acquisition will double SOCO's 2P reserves and production through the addition of 24mmbbl of oil.
Merlon's key asset is its 100% interest in the El Fayum licence which currently produces at c.7,000bbopd. The block contains 37mmbbl of contingent resources for SOCO to exploit which could take production beyond 15,000bopd. Furthermore, the northern area of the block is unexplored which SOCO will be keen to go after - management has already mapped 20 leads and prospects to be drilled between now and 2020.
The acquisition is to be financed by a mix of cash (up to USD158 million), assumption of debt (USD22 million) and issuance of 66 million new shares to Merlon's existing shareholders. The acquisition is expected to complete in H1 2019.
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