6th Jan 2016 09:23
LONDON (Alliance News) - Rockhopper Exploration PLC on Wednesday was forced back to the drawing board to review its Ombrina Mare project offshore Italy after the country's parliament reintroduced restrictions on activity near the coast.
The news is a blow to the company, which is set to merge with Falkland Oil & Gas Ltd, after Falkland Oil shareholders approved the deal on Tuesday.
The Italian parliament recently approved propositions which included the reintroduction of restrictions on offshore oil and gas activity close to the coast, banning any exploration or production within 12 nautical miles of the coast.
Italy originally launched the restrictions back in 2010, but these were repealed in 2012 before being reinstated again officially from the start of 2016.
Rockhopper's Ombrina Mare project lies within 12 nautical miles off the coast of Italy and will therefore be affected by the restrictions, prompting the company to launch a full review of the project.
The company's exploration permit over the licence was suspended at the end of 2015 just before the new laws came into affect, but Italian authorities agreed to extend the suspension until the end of 2016 to give Rockhopper the opportunity to figure out what to do with the asset.
Importantly, Rockhopper stressed that none of its other interests in Italy, including the offshore Guendalina gas field, are expected to be impacted by the new legislation.
Rockhopper did not provide any comment or update on Wednesday concerning its proposed all-share merger with fellow AIM-listed Falkland Oil & Gas Ltd, which took a step closer on Tuesday after Falkland Oil shareholders approved the deal.
Falkland Oil is now awaiting a court hearing on January 15 to sanction the scheme of arrangement which is being used to conduct the merger. If sanctioned, the scheme would become effective on January 18.
Rockhopper shareholders approved the deal last month, leaving the pair very close to concluding the deal, which will see Rockhopper take charge with Falkland Oil shareholders expected to own around 35% of the enlarged company that aims to become the biggest hydrocarbon player in the Falkland Islands.
Following the implementation of the merger, Rockhopper's executive management team will remain in place, with Falkland Oil & Gas Chief Executive Tim Bushell and Chairman John Martin to join the board of the combined company as non-executive directors.
The pair are already partners offshore the Falkland Islands, together with larger player Premier Oil PLC, giving a good base to build a company that could potentially dominate an area that already has yielded some successful discoveries.
The deal will comprise 0.2993 Rockhopper shares for every one Falkland Oil & Gas share, which at the time valued Falkland Oil & Gas at around GBP57.1 million. However, both companies have seen their share prices fall since proposing the merger.
Rockhopper shares were trading up 3.9% on Wednesday morning at 27.0 pence per share, whilst Falkland Oil shares were up 2.5% to 8.15 pence per share.
Since proposing the merger, Rockhopper shares have fallen by 26% and Falkland Oil shares by 15%.
By Joshua Warner; [email protected]; @JoshAlliance
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