3rd Oct 2013 08:41
LONDON (Alliance News) - Falkland Oil and Gas Limited and Desire Petroleum PLC said Thursday they have reached an GBP61 million agreement for FOGL to acquire the entire share capital of Desire in exchange for FOGL shares.
The oil and gas exploration and development companies, both operating in the Falkland Island Basins, said that both boards believe the deal will diversify the activities of both companies and improve finances.
Following the deal, FOGL shareholders will own 60% of the combined group share capital with Desire shareholders owning the remaining 40%.
Under the terms of the acquisition, Desire shareholders will be entitled to receive 0.6233 FOGL shares for each Desire share.
In connection with the deal, Rockhopper Exploration PLC and Premier Oil PLC signed a heads of agreement deal with FOGL to farm-in two sites which were previously majority controlled by Desire and FOGL - the Isobel/Elaine prospect, or PL004a and the Jayne East prospect, or PL004c licences - as long as the deal goes through without any problems.
Rockhopper and Premier both increased their share of costs in both the sites, where it is estimated there is 1.367 billion barrels of oil initially in place for production across the two sites.
In addition, Premier agreed to provide funding of USD48 million toward Rockhopper's share of three exploration wells in the North Falkland Basin.
FOGL said that the farm-out deals, together with existing cash balances meant that the company can begin an enhanced drilling programme of five other wells in the Falkland Basins.
Desire Petroleum shares soared 31% to 16.05 pence, making it the third-biggest AIM riser Thursday.
FOGL shares were down 5.3% to 27.00 pence, Premier Oil shares were down 0.3% to 331.20 pence and Rockhopper shares were up 1.2% to 129.50 pence Thursday.
By Tom McIvor; [email protected]; @TomMcIvor1
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Related Shares:
PMO.LRockhopperDES.LFOGL.L