TRAP Oil has inked a potentially lucrative North Sea oil deal with energy heavyweights Centrica and Nippon, City A.M. can reveal.
The AIM-listed company has been paid £2.5m in cash for its Kew exploration site and will retain a 20 per cent stake to give it a share of future earnings.
The company is due to announce the deal to the market today.
Trap is expecting a healthy return on the £30m it paid to acquire Reach – which owned the Kew site – because it is expects the field to generate significant profits once it has been developed by Centrica and Nippon.
The company, which listed on AIM in March after raising £60m in an initial public offering, has eight ongoing projects in the North Sea and is hoping the deal will help to catapult it from small cap to mid cap status.
A source close to the deal said: “Things are happening quickly for Trap. It is a young company looking for fast expansion with an ambitious management team.”
Trap, which is backed by institutional investors including Axa and Schroders, is eyeing other acquisitions despite volatile world markets, the source said.