Friday, 03 December 2021 01:07 GMT

Condor Petroleum's deal to buy Marsa is compelling says CEO


(MENAFN- ProactiveInvestors)--ADDS BROKER COMMENT-- Condor Petroleum (TSE:CPI) has struck an agreement to acquire Marsa Energy (CVE:MEP) which will provide near term sustainable cash flow and additional long-term growth potential it said. The new  company will have significant exploration and development assets. Condor has the rights to explore the 3777 sq km Zharkamys West 1 Territory located in Kazakhstan's Pre‐Caspian basin and Marsa has four contiguous production licenses covering approximately 171 sq km in Turkey. Don Streu chief executive of Condor said the acquisition was "compelling" for Condor. "Leveraging off Condor's strong balance sheet to bring Marsa's Poyraz Ridge discovery to market and combining the highly prolific prospect inventories should add significant shareholder value over the coming years" he said. Blair Anderson chief executive of Marsa said his company had an excellent portfolio of Turkish production licenses with significant growth potential. The deal sees all the issued and outstanding shares of Marsa  exchanged for  Condor shares based on an exchange ratio of 1.84326 Condor Shares for each Marsa Share held. This represents a 53.7% premium to Marsa's 20-day volume-weighted average trading price. Marsa shareholders will thus hold 20% of the total issued and outstanding Condor Shares immediately following completion of the arrangement. Broker Dundee notes the deal has been unanimously approved by both boards.   "Albeit well capitalised with US$34mm of working capital technical bureaucratic and economic issues will likely continue to hinder the delivery of any timely and material value to shareholders from Condor's pure-play exposure to Kazakhstan's prolific Pre-Caspian basin" noted analyst David Dudlyke.   "Condor's proposed acquisition of Marsa should therefore be viewed not merely as an exercise in asset diversification but as an effective 'reboot' - Marsa's asset base not only lifts Condor's pro-forma reserve base three-fold but also provides a relatively swift largely debt-funded route to first cashflow with growth thereafter supported by offset discoveries and further prospectivity."   The broker rates the stock as 'neutral' speculative risk and has a price target of C$0.10.   The current price is C$0.07 - 12.5% down on the day.


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