Oisín Fanning’s San Leon writes down Barryroe interest

Oil and gas explorer posted a pretax loss of €48m last year

A drilling rig operating at the Irish oil prospect Barryroe. San Leon Energy, the Africa-focused oil and gas explorer wrote down the value of its interest in the area.

A drilling rig operating at the Irish oil prospect Barryroe. San Leon Energy, the Africa-focused oil and gas explorer wrote down the value of its interest in the area.

 

San Leon Energy, the Africa-focused oil and gas explorer led by former stockbroker and telecoms entrepreneur Oisín Fanning, posted a pretax loss of $53.7 million (€47.9m) last year as it wrote down the value of its interest in Irish oil prospect, Barryroe.

The London-listed company had reported a $2 million loss for the previous year.

Still, the company highlighted in its annual report that it has returned $66 million to shareholders through share buybacks and special dividends, the equivalent of about half its current market value, over the past 15 months. This was driven by income from its interest in a massive Nigerian oil field.

Mr Fanning hiked his stake in San Leon in the middle of May to almost 24 per cent from about 2 per cent by spending £20.7 million buying out part of UK hedge fund Toscafund’s interest. Toscafund continues to own just under 51 per cent of the business.

San Leon holds a 10.6 per cent indirect interest in the so-called OML 18 massive oil operations in Nigeria, by way of a complicated deal executed in 2016 when it backed Africa’s Midwestern Oil and Gas in securing a wider interest in the oilfield. The Irish company also receives an annual 17 per cent coupon on $174 million of loan notes it received from Midwestern as part of the original deal.

San Leon also owns a right to 4.5 per cent of future expected net profits from Dublin-based Providence Resource’s Barryroe oil prospect off the coast of Cork.

Barryroe was found in 2012 to have 346 million barrels of oil equivalent. However, two farm-in agreements – struck in 2015 and 2018, respectively – fell through after the selected partners, most recently Chinese company Apec, failed to come up with the necessary funds to complete a transaction.

In April, Providence selected a preferred new farm-in candidate, Norwegian oil field development company SpotOn, with a view to striking a deal by the end of October.

San Leon said in its annual report that it has changed the method by which it values its interest in Barryroe profits, once equity holders’ costs have been recovered. San Leon decided to value its interest on the basis of Providence’s beaten-down share price at the end of last year. The company said it believes this reflects the risk associated with the project.

“While the site survey on the project was achieved /[last September/], these delays will impact the timing of future cash flows and valuation for San Leon,” it said.

San Leon wrote down the carrying value of its interest by $48.4 million last year to $2.8 million.