March 31, 2015

Azonto Petroleum considering sale or merger

Azonto Petroleum (LON:AZO) told investors that it is considering a number of options which could see the sale or merger of the company.


This is part of an ongoing strategic review and, as is customary for such announcements, Azonto said there is no guarantee discussions will lead to either outcome.


At the same time it was a case of one-step forward, one-step back for the company’s Gazelle offshore gas development, in Cote d'Ivoire.


Good news first, the company revealed progress for the third-party power project which would become the customer for Gazelle’s gas.


CI-Energies, the state-owned utility, has signed a non-binding agreement with a reputable international company which may finance, develop and operate the power project.


The proposed operator would also be responsible for upgrading power line infrastructure for the gas-to-power project, Azonto added.


Azonto told investors that it expects the full scope and schedule for the power project will be agreed by the end of May, and this is expected to coincide with the formal approval of the power project by the Ministry of Environment and Sustainable Energy (which is a due by mid-May).


For Gazelle itself, however, there is expected to be a delay to project sanctioning as the Vioco Petroleum joint venture company has decided to re-launch a tendering process. It comes after one contractor proposed a lump sum price for the project which was higher than expected.


Azonto said the new tender was required to achieve a “realistic” breakeven gas price for the project, and to capitalize on current downward pressure in the market for drilling and other construction costs.


The company also said work is ongoing for the Hippo North exploration project, ahead of decision making for a potential drill programme. Vioco must commit to drilling a well before October ifthe project is to go ahead.


Azonto owns a 35% stake in Vioco, a joint venture with Vitol, and Vioco in turn owns an 87% interest in the CI-202 block which hosts Gazelle and Hippo North.



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