NEWLY-LISTED oil and gas firm Ophir Energy has agreed to buy Dominion Petroleum in a £118m all-share deal that will expand its portfolio of projects in East Africa.
Ophir, which raised $375m (£239m) when it debuted on the London Stock Exchange in July, said yesterday it would offer 0.0244 Ophir shares for each Dominion share, valuing the Dominion shares at 5.9p each, a 64 per cent premium to the previous night’s close. The firm counts Lakshmi Mittal, who owns a near 16 per cent stake, as one of its biggest shareholders.
“The acquisition reinforces Ophir’s position in its core East Africa play where it has led exploration activity resulting in three consecutive deepwater discoveries,” Ophir said in a statement.
The buy will increase Ophir’s acreage in Tanzania, give the company an entry into Kenya and allow it to potentially drill one or two further wells over the next 18 months, it said.
Dominion’s board recommended the offer, saying it provided greater certainty than remaining independent in the face of difficult market conditions and its own funding needs.
Dominion attempted a $50m placing in the summer but failed to get the plan past a few intransigent shareholders. The disappointment left the group facing inevitable takeover.
Interest in offshore East Africa has been gaining momentum since 2010 when Anadarko and Cove made a large gas discovery off the coast of Mozambique. This was soon followed by further finds by British gas firm BG Group off the coast of Tanzania .
Analysts at Oriel, retaining their “buy” stance on Ophir’s stock, said the acquisition would make Ophir one of the largest holders of exploration acreage in East Africa.
Nick Cooper, chief executive officer of Ophir, said: “Ophir has been at the forefront of exploration efforts in deepwater Tanzania and has developed a detailed technical understanding of this emerging east Africa offshore play.”
MEET THE ADVISERS
DR PAUL WHEELER
BOA MERRILL LYNCH
Dominion is being advised by Bank of America Merrill Lynch and RBC Capital Markets.
The Merrill team is headed by Dr Paul Wheeler, a managing director of the bank’s oil and gas investment banking group based in London.
A geologist by background, Paul received a PhD on the Petroleum Geology of Southeast Asia from the University of Cambridge and worked on a number of exploration projects for oil companies before joining the banking industry.
His team includes Anya Weaving and Paul Frankfurt.
Leading the team at RBC is Jeremy Lowe who last week advised Premier Oil on its £221m bid for Encore Oil. This has been a fine period for RBC which earlier this week won the broking mandate for Ithaca Energy.
Ophir is being advised by JP Morgan whose team is being led by Neil Passmore.