South Atlantic-focused oil exploration companies Rockhopper and Falkland Oil and Gas (FOG) have agreed to an all-share merger of the two companies.
The combined group will be the largest North Falkland Islands exploration licence-holder and have enhanced prospects of progressing the Sea Lion project through final investment decision.
The current shareholders of Rockhopper will own approximately 65% of the combined company’s issued share capital and FOG will own 35%
Based on the closing price of a Rockhopper Share on 23 November 2015 of 35.75 pence, the merger values the entire issued and to be issued share capital of FOG at approximately £57.1 million, and each FOGL Share at 10.70 pence. This represents an 11% premium to FOG’s closing share price of 9.60 pence on 23 November 2015.
Following the merger, the existing management team of Rockhopper will remain the same, with Tim Bushell (Chief Executive of FOG) and John Martin (Chairman of FOG) joining the board of Rockhopper as non-executive directors.
Pierre Jungels, Chairman of Rockhopper, said: “This transaction enhances Rockhopper’s position in the Falkland Islands, with the largest regional acreage position and most discovered resources, coupled with a strong balance sheet.
“By combining Rockhopper and FOG, we shall create a more coherent licence ownership structure in the North Falkland Basin, driven by a technically accomplished organisation with a strong exploration and appraisal track record, well positioned to access the opportunities in this emerging hydrocarbon province.
“We believe this merger will also add further momentum to the on-going work to progress the development of discovered resources in the area towards commerciality.”
Rockhopper is an AIM-quoted oil and gas exploration and production company based in the UK. It was established in 2004 and its current market value is approximately £106 million.
Rockhopper has built a portfolio of licences in the North Falkland Basin, containing the Sea Lion oil field and satellite discoveries. In 2012, Rockhopper farmed down 60% of its interest in Sea Lion to Edinburgh-registered Premier Oil.
Development planning for Sea Lion Phase 1a is maturing and pre-FEED work has recently been completed. Preferred contractors have been selected for the provision of both the FPSO and the subsea system facilities. During FEED, fabrication plans for the facilities will be finalised and contractors for drilling and well services will be selected.
Rockhopper, Premier and the Falkland Islands Government are currently in discussions to decide upon the start date and duration of the FEED programme.
Through its 2015 exploration campaign focused on the acreage surrounding Sea Lion, Rockhopper has further strengthened its own resource base with significant oil discoveries at the Zebedee and Isobel Deep wells in the North Falkland Basin.