By Alex MacDonald
LONDON--The London-listed shares of Tangiers Petroleum
Ltd.(TPT.AU) plunged after a seven-week trading suspension was
lifted following the company's decision to issue shares and exit
its offshore Moroccan Tarfaya project.
The Morocco-focused oil explorer's London shares fell nearly 74%
at the opening before settling at 0.78 pence a share, down 67% on
the day as of 0902 GMT. The shares have fallen 93% this year,
resulting in a market capitalization of 5 million pounds ($8.47
million).
Tangiers' London and Sydney shares were both suspended on Aug. 6
after the company announced that Tarfaya's project
operator--Portuguese company Galp Energia SGPS SA (GALP.LB)--had
abandoned the TAO-1 exploration well on the Tarfaya block.
The company owns a 25% stake in the block with Galp holding 50%.
The remaining stake is held by Morocco's National Office of
Hydrocarbons and Mines.
The TAO-1 well was estimated to cost $73 million to drill but
costs escalated to a sum that was only fully quantified after the
well was completed, Tangiers said. The company will now pay for its
$18.56 million share of the costs in cash, leaving it with a cash
balance of 1.25 million Australian dollars ($1.11 million).
Tangiers plans to exit the project by transfering its stake to
Galp before the permit expires in February. Should the transaction
fail to close by then, Tangiers will have to pay $3.4 million to
Galp. That payment "has a low chance of realization" since both
parties want to conclude the deal, the company said.
This may be due to the fact that Tangiers agreed to pay Galp the
$3.4 million either in stock or cash if Tangiers' market
capitalization exceeds $50 million within seven years. The
company's chairman Michael Evans declined to comment on whether the
two were linked. Tangiers will also have to make the payment if it
delists for any reason, including a change of control.
Tangiers plans to raise an additional A$1.2 million via a
previously announced private share placement and cut its executive
pay.
Write to Alex MacDonald at alex.macdonald@wsj.com
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