23rd May 2014 08:22
LONDON (Alliance News) - Rockhopper Exploration PLC has agreed to acquire fellow AIM firm Mediterranean Oil & Gas PLC in a deal announced Friday that values Mediterranean Oil & Gas at GBP29.3 million and will create an oil and gas company with a market value of GBP294.5 million.
Mediterranean Oil & Gas said that after a series of setbacks over the past year at its principal producing asse, the Guendalina Field, as well as continuing regulatory delays to its key development project Ombrina Mare, its growth strategy has been held back.
"In the current market conditions, the board strongly believes that this can only be achieved by a significantly more capitalised company," said Mediterranean Oil & Gas Chairman Keith Henry in a statement.
Under the terms of the deal, Mediterranean Oil & Gas shareholders will receive 6.5 pence per share in cash and Rockhopper shares, for each Mediterranean Oil & Gas share held.
Mediterranean Oil & Gas shareholders will also receive a contingent consideration offer of up to a maximum amount of 3.550 pence in cash for each share held in the company.
Mediterranean Oil & Gas shares were up 16% at 6.53 pence Friday morning, making them one of the biggest gainers on AIM, while Rockhopper shares were down 0.2% at 94.36 pence.
"This transaction represents an important milestone for the company as we add production to our portfolio and broaden our exploration and development opportunity set, by establishing ourselves in an area our team understands well," said Rockhopper Chairman Pierre Jungels said in a separate statement.
The companies said the contingent consideration offer is a contractual, non-transferable, unsecured, interest-free obligation of Rockhopper to make an additional one-off cash payment of between GBP11.9 million and GBP16.0 million in total.
The amount of cash payable in the contingent consideration offer will be determined by the success of a high-risk exploration well at the Hagar Qim prospect offshore Malta, and at least 80 million barrels in total in the 2C Contingent Resources of liquid hydrocarbons, estimated to be potentially recoverable from the Hagar Qim prospect.
In March, a UK court ruled in Mediterranean Oil & Gas's favour in a case brought by Leni Gas & Oil PLC related to Malta.
"The contingent consideration offer is intended to afford Mediterranean Oil & Gas shareholders an opportunity to benefit from the potential success of the HQ prospect," the two companies said in a separate but almost identical shares.
Mediterranean Oil & Gas is a Europe-focused oil and gas exploration and production company with operations in Italy, Malta and France, while Rockhopper is an exploration and production company with its principal asset being 5,800 square kilometres of prospective oil and gas acreage in the North Falkland Basin.
Rockhopper's balance sheet currently holds cash of around USD250 million, equivalent to around GBP147 million.
"While the acquisition cost and capital exposure are modest in relation to our balance sheet, the upside potential is significant," Rockhopper's Jungels added.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Rockhopper