Rex International Holding, on March 9, has issued a clarification on the financial impact of the acquisition of the producing Brage Field by its 91.65%-owned subsidiary Lime Petroleum AS’s (LPA). The acquisition was completed Dec 31, 2021.
Earlier on June 15, 2021, LPA entered into a conditional sale and purchase agreement (SPA) with Repsol Norge AS (Repsol), to acquire Repsol’s 33.8434% interests in the oil, gas and natural gas liquids (NGL) producing Brage Field on the Norwegian continental shelf for a post-tax consideration of US$42.6 million ($57,985).
The acquisition of the Brage Field did not contribute to any income or profit before tax in the group’s FY2021 ended 31 December 2021, but was recognised as a “gain from bargain purchase” of US$18.2 million in terms of accounting treatment, as the acquisition was completed on Dec 31, 2021, explained Rex in its statement.
“Due to the transaction being regarded as a business combination, the revenue, EBITDA and profit are not normally recognised in our books, but resulted in a bargain purchase gain, even though we have a right to the underlying cash-flow from the transaction from Jan 1, 2021,” explains Dan Broström, executive chairman of Rex.
“From this year 2022, revenue from the Brage Field will be fully recognised in our profit and loss statement and will make an important contribution. The estimated average oil price in 2021 for production from the Brage Field was around US$72 per barrel of oil equivalent. This should be compared to the price of Brent today trading at over US$120 a barrel,” he adds.
Broström explains that this bodes well for a strong start to 2022 as the group now has two production legs to stand on - Norway and Oman.
See also: Mapletree Industrial Trust reports slightly higher 3QFY2025 DPU of 3.41 cents
Shares in Rex are trading at 2 cents lower or 4.4% down at 44 cents on March 9.
Photo: Bloomberg
