AIM-listed Mediterranean Oil & Gas (MOG) has sold its 75 per cent stake in its wholly owned subsidiary Phoenicia Energy Company (PECL) to Genel Energy.
PECL owns the rights to exploration activity in Malta Offshore Area 4.
Under the terms of the sale agreement Genel has acquired MOG's 75% interest for an immediate cash payment of $10m and 100% carry of the cost for the first exploration well, Hagar Qim 1, which is planned to be drilled to a minimum depth of 2,500 metres.
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Genel will also have 100% carry of the cost for the second exploration well up to a maximum of $30m gross expenditure.
At MOG's option, should the costs of the second well exceed $30m, Genel will provide a financing arrangement to fund MOG's 25% share of any additional expenditure, at an interest rate equivalent to three month LIBOR plus 400 bps.
Dr. Bill Higgs, the Chief Executive Officer of Mediterranean Oil & Gas, said: "We are very pleased to have completed this transaction with Genel. This enables PECL to progress with the preparation for the drilling of the MOG operated Hagar Qim 1 exploration well offshore Malta, planned for late 2013."
MOG's share price was up 3.57% to 10.88p at 11:58 on Friday.
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