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Rex International unit to divest stakes in two Norway assets

REX International has announced on Monday a deal to divest its interests in two Norway assets through its 90 per cent-owned subsidiary Lime Petroleum. 

The oil and gas company is selling to Lundin Norway its 30 per cent interest in the Rolvsnes discovery in PL338C, PL338E and its 20 per cent stake in the Goddo prospect in PL815.

The transaction, to be effective from Jan 1, 2019 - a standard practice in Norway - involves a cash consideration of US$43 million and a contingent payment of US$2 million if no adverse event materialises within a 12-month period from the completion of the divestment.

The cash component will be paid on the sale's completion date, while the contingent payment will be paid one year later if no adverse event materialises.

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Rex has said that the sale is pending customary government and regulatory approvals.

The deal takes into consideration the unaudited net asset value of both sites, which is about US$13.29 million as at Sept 30, 2018.

Based on number of shares issued at the end of September 2018, net asset value per ordinary share will increase to 11.40 US cents from 9.20 US cents after the sale, while earnings per share will be 1.71 US cents from a loss per share of 0.50 US cent.

Rex will use the proceeds for exploration and production activities, particularly on the Norwegian Continental Shelf and to maintain a high equity stake in its Oman licence.

The company has said the sale is a part of its intrinsic business model to sell mature assets.

The Rolvsnes site has a gross estimated resource range of between 14 and 78 million barrels of oil. For the Goddo site, an exploration well will be drilled in 2019.

Following the sale, Lime Petroleum will continue to hold 30 per cent interests in two North Sea licences, and a 20 per cent interest in a Norwegian Sea licence.

The North Sea licences are located in Utsira High, where potential commercialisation of discoveries can be fast-tracked as they are located close to existing oil production infrastructure.

Following its trade halt at 7.55am on Monday, Rex requested a lift of the halt at 1.48pm on the same day. Trading resumed at 2.30pm, with its shares up 0.6 Singapore cent at S$0.087 as at 2.53pm.