UK junior Leni Gas & Oil (LGO) has axed its proposed tie-up with Italian explorer Pansoinco regarding assets in Spain.
The London-listed player said on Wednesday it is no longer looking to shop its assets, which include the producing Ayoluengo field and the prospective Hontomin field development.
LGO had in mid-March struck a partnership pact with Pansoinco for the exploration and development of multiple assets in the north of Spain.
Pansoinco was set to take over operatorship of the assets, as well as assume all operating and development costs, from 31 January 2017 under a heads of terms signed between the pair.
The Italian company was to gain a 65% stake in Leni Investments CPS, the holding company for Compania Petrolífera de Sedano that holds the assets, with LGO retaining the remaining 35%.
However, LGO said on Wednesday that is has terminated the negotiations and that it “is no longer actively seeking furter expressions of interest”.
Chief executive Neil Ritson explained: "In the light of the recently announced successful drilling and production results in Trinidad, the company has reassessed the benefits of the proposed partnership and is now firmly of the opinion that greater value can be obtained from the Spanish assets through LGO investing in additional well capacity in the period of 2016 to 2020, at a time when there is expected to be free cash flow available from the Company's operations in Trinidad."
LGO continued: “Immediate plans for the Spanish assets include the anticipated award of a production concession at Hontomin in 2014 and additional well maintenance and stimulation of the producing wells at Ayoluengo field.
“The Ayoluengo field remains profitable and the company is confident that its 2014 production forecast will be met.
It did add, however, that “strategic alliances (in Spain) have not been ruled out for the future”.
Shares in LGO were up more than 4% shortly after the announcement.