News blog
Silvermere Energy / Chalkwell Investments
- BY: Andrew Hore |
- POSTED: 24/07/2011 |
Silvermere Energy is on course to complete the acquisition of a 33.3% working interest (and 20.83% net entitlement interest) in Mustang Island oil and gas assets in the Gulf of Mexico, which will enable the company’s shares to return from suspension.
Silvermere was formerly known as Chalkwell and prior to that it was called The Core Business. The original toiletries and cosmetics business was closed and the company went through a Company Voluntary Arrangement (CVA) last year. The shares were suspended at 60.5p each on 26 January 2011. The latest transaction is classed as a reversal and readmission is due on 16 August.
Silvermere is acquiring the interest in Mustang Island following previous loans to the current owner. Dominion Petroleum owns the rest of the Mustang Island assets. The area was originally drilled more than three decades ago by Chevron and there was gas production until 1995 when the gas price fell.
RPS says that the assets acquired have an NPV of £18.4m but this is based on rising oil and gas prices. Joint broker Old Park Lane is more cautious and assumes flat oil and gas prices. On that basis the NPV is £14.7m.
A share placing will raise £1.5m at 25p a share. That should value the company at around £4.9m. The placing price is well below the suspension price but this was the level at which Silvermere could raise the cash it required to finance the development of the Mustang Island assets and the costs of the deal. More cash will be required for the field development plan to be completed.
Silvermere has already raised cash from convertible loan notes. Tranche A of £375,000 convertible loan notes will be converted at a 10% discount to the placing price.
Tranche B of £375,000 convertible loan notes lasts for two years and the income related to this tranche is a 10% share of Silvermere’s 16.65% working interest in the I-1 gas production well on Mustang Island which should be in production by the end of 2011. That should be around $7,500/month or $90,000 (£56,000) a year. Silvermere will still generate $68,000 a month from its share of the I-1 revenues.
Silvermere is seeking other US assets that are near production and there is an opportunity to upgrade the resource figures. These could be shallow offshore and onshore assets.
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