DEO in £10.5m deal to acquire share of North Sea assets

DEO Petroleum has acquired a part share in the North Sea assets of Nexen Petroleum in a deal worth £10.5 million.

The company is funding the reverse takeover by raising 16m before expenses through a placing of shares at 45p each.

The deal will give the company a 42.08 per cent working interest in certain licence areas in the central North Sea, 185 kilometres northeast of Aberdeen in a water depth of 127 metres (450ft).

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David Marshall, chief executive for DEO, said: "This is an exciting time for DEO as we make our first acquisition.

"We have a proven and experienced management team who have successfully developed and commercialised North Sea assets in recent times. By applying advanced subsea technology and first-class drilling operations to stranded assets we aim to become the leading independent operator of high-value subsea developments in the Central North Sea."

Shares in Deo were suspended from trading on the Alternative Investment Market on 22 September pending the agreement and the publication of an AIM admission document. Dealings in the expanded company are expected to begin on or before 8 November.

FirstEnergy Capital acted as broker and lead book runner and Merchant Securities acted as nominated adviser and placing agent.

Marshall, 52, has 30 years' experience in the oil and gas sector. Until August 2009 he was senior vice president, operations and general manager of Oilexco N.S. Exploration and has previously held various managerial positions in both onshore and offshore oil and gas drilling and production operations in the UK, the Caspian region, Africa, the Middle East and Western Europe.

The chairman is Kevin Burke, 64, who has 30 years' experience in the structuring and financing of transactions and the broader strategic development of companies in the natural resources and oil and gas sectors.

He was a co-founder and executive chairman of two publicly listed companies, Dana Petroleum (Russia) and Vanguard Petroleum