By Alex MacDonald

LONDON--The London-listed shares of Tangiers Petroleum Ltd.(TPT.AU) plunged after a seven-week trading suspension was lifted following the company's decision to issue shares and exit its offshore Moroccan Tarfaya project.

The Morocco-focused oil explorer's London shares fell nearly 74% at the opening before settling at 0.78 pence a share, down 67% on the day as of 0902 GMT. The shares have fallen 93% this year, resulting in a market capitalization of 5 million pounds ($8.47 million).

Tangiers' London and Sydney shares were both suspended on Aug. 6 after the company announced that Tarfaya's project operator--Portuguese company Galp Energia SGPS SA (GALP.LB)--had abandoned the TAO-1 exploration well on the Tarfaya block.

The company owns a 25% stake in the block with Galp holding 50%. The remaining stake is held by Morocco's National Office of Hydrocarbons and Mines.

The TAO-1 well was estimated to cost $73 million to drill but costs escalated to a sum that was only fully quantified after the well was completed, Tangiers said. The company will now pay for its $18.56 million share of the costs in cash, leaving it with a cash balance of 1.25 million Australian dollars ($1.11 million).

Tangiers plans to exit the project by transfering its stake to Galp before the permit expires in February. Should the transaction fail to close by then, Tangiers will have to pay $3.4 million to Galp. That payment "has a low chance of realization" since both parties want to conclude the deal, the company said.

This may be due to the fact that Tangiers agreed to pay Galp the $3.4 million either in stock or cash if Tangiers' market capitalization exceeds $50 million within seven years. The company's chairman Michael Evans declined to comment on whether the two were linked. Tangiers will also have to make the payment if it delists for any reason, including a change of control.

Tangiers plans to raise an additional A$1.2 million via a previously announced private share placement and cut its executive pay.

Write to Alex MacDonald at

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