29th Nov 2007 12:22
Lansdowne Oil & Gas plc29 November 2007 29 November 2007 Lansdowne Oil & Gas plc ("Lansdowne" or the "Company") Proposed acquisition of Milesian Oil & Gas Limited Highlights * Proposed acquisition of Milesian for initial consideration of 8,921,118shares in Lansdowne, representing 30 per cent. of the Enlarged Issued ShareCapital. * Milesian's principal assets are Licensing Options 05/2 and 05/1 in theCeltic Sea, offshore Ireland. Two large structures, Amergin and Eremon, havebeen identified and mapped by Milesian and are considered prospective for oil inJurassic reservoir targets. * Combining Milesian's and Lansdowne's respective Celtic Sea assets willbroaden the portfolio, create greater critical mass furthering the objective ofbuilding a cost effective multi-well exploration programme. * Loan facility of £1 million to be made available on completion of theAcquisition. * Ramco Energy's shareholding in Lansdowne will be diluted down to below50 per cent., currently 61 per cent. * Emmet Brown, Richard Pollock and Thomas Anderson, all current directorsof Milesian, will be appointed to the Lansdowne Board upon completion of theAcquisition. * The proposed Acquisition is conditional on Lansdowne shareholdersapproval at a General Meeting to be held on 17 December 2007 - Lansdowne'slargest shareholder, Ramco Hibernia Limited (61 per cent.), has undertaken tovote in favour of the proposed acquisition. Steve Boldy, CEO of Lansdowne, commented: " We know Milesian and its assets well and they are an excellent fit with theLansdowne assets and our strategy. This acquisition will create an enhancedentity which will better enable us to move forward our combined portfolio ofprospects. I look forward to working with Emmet Brown in developing our excitingenlarged acreage to its full potential and delivering value to ourshareholders." Introduction The Company announces the proposed acquisition of Milesian for an initialconsideration to be satisfied by the issue of 8,921,118 new Ordinary Shares,representing 30.0 per cent. of the Enlarged Issued Share Capital. Furtherdeferred consideration of up to 8,110,099 new Ordinary Shares may be payabledependent upon the results of a 2D seismic programme over Milesian's Celtic Seaacreage. The Acquisition is conditional upon, inter alia, Admission of the newOrdinary Shares to the AIM Market and the passing of all the resolutions at aGeneral Meeting of the Company convened for 17 December 2007. Information on Milesian Milesian's principal assets are Licensing Options 05/2 and 05/1 in the CelticSea (the "Licensing Options"). These were awarded in 2005 by the Department ofCommunications Marine and Natural Resources in Ireland and Milesian has carriedout regional geological studies and detailed mapping of existing seismic data,resulting in the identification of a number of prospects and leads. Both of the Licensing Options have been extended until the end of 2007. Underthe terms of the Licensing Options, the holder has the first right, exercisableat any time during the period of the option, to an Exploration Licence over allor part of the area covered by the option. Milesian intends to apply for one ormore 'Standard Exploration Licences' prior to the year-end. The acreage covered by the Licensing Options is contiguous with some ofLansdowne's Celtic Sea acreage. Within Licensing Option 05/2, Milesian hasidentified and mapped two large structures, Amergin and Eremon, which areconsidered prospective for oil in Jurassic reservoir targets. Amergin prospect The Amergin prospect lies in water depth of c. 350ft, some 40km south of theIrish coast and approximately 60 km west of the Kinsale Head gas field. The Amergin prospect is a tilted fault block mapped on 2D seismic data. Trialreprocessing of key existing 1986 seismic data has demonstrated the scope forsome improvement in data quality and the planned forward programme is to acquireadditional new 2D seismic data to improve structural definition of the Amerginand Eremon structures. A 2D seismic programme of c. 485km was planned for 2007,but boat availability issues in the fair weather acquisition season resulted inthis being postponed. The planned start date is now in the spring of 2008. The primary reservoir objective is the basal Upper Jurassic sandstone sequenceproven productive in well 49/9-2 (Helvick discovery), where this sequence flowedon test at a rate of 6,467 bopd of excellent quality 44-degree API oil. Milesian has estimated P50 potentially recoverable prospective resources of 90MMBbls for the basal Upper Jurassic reservoir. Eremon lead The Eremon lead lies in water depth of c.350ft, some 40km south of the IrishCoast and approximately 70km west of the Kinsale Head gas field. Secondary reservoir targets exist in deeper Jurassic horizons and in shallowerCretaceous Wealden sands. The Eremon structure is a NE-SW trending horst block feature with probable dipclosure demonstrated to the NE and SW. Milesian considers Eremon to be the onlyidentified closed horst feature at Jurassic level, along the northern margin ofthe North Celtic Sea Basin. Eremon is classified as an exploration lead and oneof the objectives of the additional seismic data programme planned for 2008 isto confirm closure and upgrade this structure to prospect status. Financial information on Milesian Milesian made a loss of €167,042 for the seven month period ended 31 October2007 and a loss of €798,849 for the year ended 31 March 2007 (year ended 31March 2006: €25,485 loss). The loss in the year ended 31 March 2007 consistedmainly of a pre-production expenditure write-off, against a project outside ofIreland, of €692,030. As at 31 October 2007, Milesian's net assets were €500,579 and as at 31 March2007, its net liabilities were €39,155 (year ended 31 March 2006: net assets of€759,695). Proposed Directors It is proposed that Emmet Brown, Richard Pollock and Thomas Anderson will jointhe Board on completion of the Acquisition. Emmet Brown is currently ManagingDirector of Milesian and will join the Board as Director of BusinessDevelopment. Thomas Anderson and Richard Pollock, currently Non-ExecutiveDirectors of Milesian, will join the Board as Non-Executive Directors. Furtherdetails are set out below under the heading "Additional information". Background to and reasons for the Acquisition Both Lansdowne and Milesian are upstream oil and gas companies holding acreagein the Celtic Sea, offshore southern Ireland. However, whilst Lansdowne has focused upon targets in the Lower CretaceousGreensand and Wealden reservoirs, the horizons that produce in the Kinsale,Ballycotton and Seven Heads Gas Fields in the Celtic Sea, Milesian has focusedupon Jurassic targets, similar to those that tested oil in the Helvick 49/9-2discovery. The Directors and Proposed Directors believe that combining their respectiveCeltic Sea assets enhances the spread of the combined entity's prospects, withMilesian's substantial Jurassic oil prospects complementing Lansdowne'sCretaceous, predominantly gas, prospects. The Directors and Proposed Directorsfurther believe that the combined portfolio of assets will have greater criticalmass and should improve the chances of the combined entity concluding successfulfarm-outs and building a cost-effective multi-well exploration programme in theCeltic Sea. Terms of the Acquisition Lansdowne has conditionally agreed to acquire Milesian from the Vendors for amaximum consideration of up to approximately £8.17 million (based on theCompany's closing mid-market share price on 28 November 2007), comprising: (a) an initial consideration of approximately £4.28 million, to be satisfied bythe issue of 8,921,118 Initial Consideration Shares; and (b) deferred consideration of up to approximately £3.89 million, conditionalupon the issue of the successor authorisation, option or licence in respect ofLicensing Option 05/2, to be satisfied by the issue of a maximum of 8,110,099Deferred Consideration Shares. The number of Deferred Consideration Shares to beissued to the Vendors will be: (i) 2,333,419 Deferred Consideration Shares in the event of the provision by anindependent technical consultant of an updated Independent Technical Report (the"Updated Report") addressed to Lansdowne relating to Milesian's assets reportingthere to be at least 63 MMBOE best case potentially recoverable prospectiveresources from the area covered by Licensing Option 05/2; and (ii) a further 62,790 Deferred Consideration Shares for every additional 1 MMBOE best case potentially recoverable prospective resources fromMilesian's assets (over the 63 MMBOE referred to above) reported in the UpdatedReport, up to a maximum of 5,776,680 Deferred Consideration Shares. In order for the maximum number of Deferred Consideration Shares to be issuedthe best case potentially recoverable prospective resources from the UpdatedReport must exceed 155 MMBOE. The Acquisition is conditional upon, inter alia; (i) each of the Resolutions(including a resolution to waive any obligation upon certain Vendors to complywith the requirements of Rule 9 of the Code being passed on a poll by theIndependent Shareholders) at the General Meeting and (ii) Admission. Applicationwill be made for the Consideration Shares to be admitted to trading on AIM. Itis expected that Admission will become effective and that dealings in theConsideration Shares will commence on AIM on 18 December 2007. Loans Facility and Grant of Warrants Loan Facility The Company also announces that it has entered into a loan agreement with eachof Kevin Anderson and LC (Mr Anderson and LC being the "Lenders") on the sameterms, pursuant to which each Lender has agreed to provide the Company with aloan facility of up to £500,000 (total facility of up to £1 million), thedrawdown of which is conditional upon completion of the Acquisition and theCompany giving the Lenders certain representations and undertakings at the timeof drawdown. The Company is permitted only to request drawdown of any loanmonies pursuant to the said loan agreements when its cash reserves on short-termdeposit reduce to below £100,000. Drawdown must be in not more than 4 separateinstalments of at least £125,000 each with the last drawdown request requiringto be made on or before 30 September 2008. Interest shall accrue at the rate ofLIBOR plus one per cent. per annum and shall be paid at the same time asrepayment of any outstanding loan monies. Repayment in full and in cash togetherwith all accrued interest shall be effected on the date 364 days after the dateof first drawdown (or such other date as the Company and the Lenders may agree).The loan becomes repayable immediately on the occurrence of certain specifiedevents. Drawdowns pursuant to the loan agreements are required to be in equalamounts from each Lender. Warrants The Company has also executed warrant instruments, pursuant to which the Companyhas granted warrants to subscribe for up to 1,750,000 new Ordinary Shares toeach of the Lenders at an exercise price of 50 pence per share, conditional uponcompletion of the Acquisition (the "Warrants"). The Warrants are exercisable inwhole or in part on or prior to 31 May 2009. The number of warrants is subjectto appropriate adjustment in the event of the Company's ordinary share capitalbeing sub-divided, consolidated or otherwise reorganised. The Company shallapply for all new Ordinary Shares issued upon the exercise of the Warrants to beadmitted to trading on AIM or such other recognised investment exchange on whichthe Company's ordinary share capital is traded at that time. Key Shareholdings On Admission, the following persons will be interested in three per cent. ormore of the Enlarged Issued Share Capital: At present At AdmissionShareholder Ordinary Percentage of Ordinary Percentage of Shares held issued share Shares held issued share capital capitalRamcoHibernia 12,728,308 61.15 12,728,308 42.80Limited*LC CapitalMasterFund, 5,225,000 25.10 5,225,000 17.57Ltd*Thomas - - 3,443,390 11.58AndersonEmmet Brown - - 2,951,102 9.92Kevin - - 1,212,781 4.08AndersonCitigroupGlobalMarketUK Equity 989,296 4.75 989,296 3.33Limited *LC Capital Master Fund, Ltd holds an option to acquire all or some only of the12,728,308 Ordinary Shares currently held by Ramco Hibernia Limited Current Trading The Company continues to employ one full time paid executive director (StephenBoldy) and to receive administrative and technical support from Ramco under aservice agreement. These costs and professional fees which are incurred inconnection with the Company's quoted status, form the Company's ongoingadministrative expenses and are in line with budget. The Company was awarded two standard exploration licences by the Department ofCommunications Marine and Natural Resources in Ireland in August 2007 and iscurrently evaluating the options available for raising the requisite funding tosupport the work programmes associated with the licences. The Directors believethat these options will be enhanced by the completion of the Acquisition. RHL Shareholding On 26 June 2007, LC purchased 5,225,000 Ordinary Shares, representing 25.1 percent. of the current issued share capital of Lansdowne, from RHL and entered into an optionagreement to acquire RHL's remaining interest in Lansdowne of 12,728,308Ordinary Shares, representing 61.1 per cent. of the current issued share capitalof Lansdowne. Accordingly, under the Code, LC would normally have incurred anobligation under Rule 9 of the Code to make a general offer to all the remainingshareholders of Lansdowne to acquire their shares. However, as RHL stated to thePanel that it would not accept such an offer in the event that an offer were tobe made, the Panel waived the requirement on LC to make such an offer until suchtime as RHL holds less than 50 per cent. of the issued share capital ofLansdowne and an offer would be capable of acceptance. On Admission, RHL will hold approximately 42.8 per cent. of the then issuedshare capital of Lansdowne and accordingly LC would be obliged to make a generaloffer to all the remaining shareholders of Lansdowne to acquire their shares.However, RHL has re-affirmed and certain Vendors who will, in aggregate, holdapproximately 25.6 per cent. of the Enlarged Issued Share Capital on completionof the Acquisition, have confirmed that none of them would accept such an offer.As a result, the Panel has, conditional on Admission, waived the requirement onLC to make an offer until such time as RHL and those Vendors hold, in aggregate,less than 50 per cent. of the issued share capital of Lansdowne and an offerwould be capable of acceptance. Copies of the Shareholder Circular Copies of the circular, which will be sent to Shareholders later today, will beavailable from John East & Partners Limited, 10 Finsbury Square London EC2A 1ADand from the Company's website www.lansdowneoilandgas.com. Enquiries:Lansdowne Oil & Gas plcSteve Boldy, Chief Executive 01224 748480 John East & Partners LimitedDavid Worlidge /Bidhi Bhoma 020 7628 2200 Additional Information Details of the Proposed Directors are as follows: Emmet Kevin Brown, (proposed Director of Business Development), aged 57, ismanaging director and founder of Milesian. Mr Brown is a petroleum geologistwith 30 years' experience, having worked in many facets of exploration &production worldwide. Mr Brown was employed initially by multinational companiesin positions of increasing responsibility and later as CEO and Managing Directorof two junior quoted E&P oil and gas companies. Mr Brown re-established Milesianin 2003 to explore the Irish offshore. He began his career with US-basedMarathon Oil in Ireland. Experienced in technical and commercial due diligenceevaluations, throughout his career he has advised banks, investment houses,private clients and oil and gas companies on matters of corporate and businessdevelopment, asset management, mergers, acquisitions and divestments and oil andgas joint-ventures. It is proposed that Mr. Brown shall enter into a service agreement with theCompany on completion of the Acquisition pursuant to which he shall be employedas Director of Business Development of the Company, such appointment being terminable by the Company ongiving 12 months' written notice or by Mr. Brown on giving six months' writtennotice. It is proposed that Mr Brown shall be entitled to a salary (subject toannual review) of €220,000 per annum and other benefits commensurate with hisposition including annual pension contributions equal to 15 per cent. of annualsalary, accident and illness insurance, permanent health insurance and lifeassurance. Mr. Brown shall also be entitled to bonus payments on the enteringinto of binding agreements with third parties in respect of any farm-outarrangements relating to the Group's assets, with Mr. Brown being required toutilise any such bonus payments to subscribe for Ordinary Shares. In addition,Mr. Brown shall be entitled to an annual bonus equal to 2 per cent. of theconsolidated audited after tax profits of the Company and its subsidiaries fromtime to time, subject to a cap equal to his annual salary during the relevantfinancial year. Unless the Company consents otherwise, Mr. Brown shall berestricted from being engaged in any capacity in any activity relating to oiland/or gas exploration and/or production in Ireland for a period of one yearfollowing termination of his appointment. Richard Pollock, (proposed Non-Executive Director), aged 59, is a petroleumgeologist who completed a thirty year career with Marathon Oil in 2003 duringwhich he worked extensively overseas in various roles as internationalexploration manager, general manager for Marathon in Gabon and general managerof CLAM Petroleum B.V. Throughout his career he developed business relationswith both state and local government and other oil and oil supporting companies.He was appointed a non-executive director of Milesian in April 2005. It is proposed that Mr. Pollock shall enter into a letter of appointmentpursuant to which the Board proposes to appoint him as a non-executive directorof the Company with effect from completion of the Acquisition. It is proposedthat the Company shall pay Mr. Pollock an annual director's fee of £15,000. Theappointment shall automatically expire on the third anniversary of the date ofappointment unless otherwise agreed with the Company, with each party having theright to terminate the appointment on the serving of three months' notice. Thomas Anderson, (proposed Non-Executive Director), aged 62, has over twentyfive years' direct executive experience involved in running a private group inthe leisure, entertainment, advertising, forestry and property developmentbusiness in Ireland. Mr Anderson has focused on risk management, corporatefinance and portfolio diversification. After graduating in Commerce andEconomics, he subsequently completed a Master of Business Administration Degreeat University College Dublin. Mr Anderson is currently non-executive chairmanof Circle Oil Plc. He was appointed as non-executive chairman of Milesian inJuly 2005. It is proposed that Mr. Anderson shall enter into a letter of appointmentpursuant to which the Board proposes to appoint him as a non-executive directorof the Company with effect from completion of the Acquisition. It is proposedthat the Company shall pay Mr. Anderson an annual director's fee of £15,000. Theappointment shall automatically expire on the third anniversary of the date ofappointment unless otherwise agreed with the Company, with each party having theright to terminate the appointment on the serving of three months' notice. Definitions"Acquisition" the proposed acquisition of the entire issued share capital of Milesian pursuant to the Acquisition Agreement"Acquisition the conditional agreement dated 29 November 2007 between theAgreement" Company and the Majority Vendors relating to the acquisition of the entire issued share capital of Milesian"Admission" the admission of the Consideration Shares to trading on AIM and such admission become effective in accordance with the AIM Rules"AIM" the AIM Market of the London Stock Exchange"AIM Rules" the rules applicable to companies whose shares are traded on AIM, published by the London Stock Exchange entitled "AIM Rules for Companies""Code" the City Code on Takeovers and Mergers"Consideration the 8,921,118 new Ordinary Shares to be issued to the Vendors asShares" initial consideration pursuant to the Acquisition Agreement"Deferred up to 8,110,099 new Ordinary Shares that may be issued to theConsideration Vendors as deferred consideration pursuant to the AcquisitionShares" Agreement"Directors" or the directors of the Company"Board""Enlarged the 29,737,071 Ordinary Shares in issue at AdmissionIssued ShareCapital""Existing the 20,815,953 Ordinary Shares in issue at the date of thisOrdinary announcementShares""General the general meeting of the Company convened for 12 noon on 17Meeting" December 2007"Independent the Shareholders other than LC and Steven LampeShareholders""LC" LC Capital Master Fund, Ltd, whose investment manager is Lampe, Conway & Co LLC, of which Steven Lampe is a managing member"Milesian" Milesian Oil & Gas Limited"Ordinary ordinary shares of 5p each in the capital of the CompanyShares""Panel" the Panel on Takeovers and Mergers"Proposed Emmet Brown, Richard Pollock and Thomas AndersonDirectors""Ramco" Ramco Energy plc and, where the context implies, its subsidiaries"RHL" Ramco Hibernia Limited, a wholly-owned subsidiary of Ramco"Resolutions" the resolutions set out in the notice of the General Meeting"Shareholders" holders of Existing Ordinary Shares"Vendors" Emmet Brown, Richard Pollock, Leo Mohan, Kevin Anderson, Thomas Anderson, Karen Hehir, Davycrest Nominees and certain other persons, being the legal holders of the entire issued share capital of Milesian Glossary"bopd" barrels of oil per day"Cretaceous" the period of geological time from 142 million years ago to 65 million years ago"Greensand" a sandstone development of Cretaceous age characterised by the presence of the mineral glauconite, giving the green colouration and indicating marine depositional conditions"Jurassic" the period of geological time from 205 million years ago to 142 million years ago"Lower Cretaceous" the rocks deposited in the Early Cretaceous, the period of geological time from 142 million to 100 million years ago"MMBbls" million barrels"MMBOE" million barrels of oil equivalent"Upper Jurassic" the rocks deposited in the late Jurassic, the period of geological time from 159 to 142 million years ago"Wealden" a sequence of estuarine and freshwater deposits of Early Cretaceous age This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Lansdowne Oil