Saffron to Buy Italian Assets, Rename as Coro

Italy-focussed, UK-listed independent firm, Saffron Energy, said on October 5 that it has reached a non-binding agreement to buy the portfolios of Africa/Italy-focussed explorer Sound Energy and Australia-listed Po Valley Energy (PVE) and subsequently rename itself Coro Energy. The assets are mainly Italian gas interests and permits.

Saffron Energy is a northern Italian gas producer which owns two producing fields: Sillaro (100%) and Bezzecca (90%) and also has a pending application to develop the Sant’Alberto gas field.

Saffron’s proposed payment to Sound/PVE for the assets is just over 185.9mn new ordinary shares in the new company. However in the longer term, it appears that only PVE intends to remain a Saffron/Coro shareholder, which suggests that at some stage Sound would be looking to be paid in cash. "Po Valley is currently interested in 53.8% of Saffron's issued ordinary share capital," said a statement from Sound Energy.

Sound said that further announcements on timing will made in due course, adding that, following the agreement, it will then be able to focus on Morocco. In the meantime, key local and executive staff at Sound, PVE and Saffron will be retained by the new entity Coro. 

The agreement would result in Saffron adding to its portfolio the Selva onshore gas field (2C reserves of 17bn ft³); the Teodorico offshore Adriatic gas field (47bn ft³) development; the Torre del Morro, Santa Maria Gorretti and Dalla gas exploration licences, plus two smaller gas fields.

Sound Energy would sell 100% of its Italian assets but retain the economic rights to the proceeds of any future sale of Badile land and VAT receivables; expected to reach a combined value of £5.6mn ($7.4mn).

PVE would also sell 100% of its Italian assets, but retain rights to the proceeds of the recent sale of its oil interests at Cadelbosco di Sopra and Grattasasso, amounting in total to €1.13mn ($1.33mn). This deal is awaiting ministry approval, having been agreed for sale to a private upstream company backed by a London private equity fund last month.

Mark Smedley