Rockhopper merges with Falkland Oil and Gas in a £57m deal to better face “challenging” oil and gas market
Rockhopper, the AIM listed oil and gas exploration company operating in the Falkland Islands, is to merge with Falklands Oil and Gas in a £57m deal.
Shareholders in exploration outfit Falklands Oil and Gas, will receive 0.2993 Rockhopper shares for each of theirs, valuing Falklands Oil and Gas stock at 10.70p a share, an 11 per cent premium to its closing share price on Monday of 9.60p.
The combined company will be the largest holder of drilling licences in the North Falkland Islands, and will have "have significantly more strategic influence over the pace and direction of oil and gas development in the North Falkland Basin."
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Rockhopper said in a statement that the current market conditions in the oil and gas sector was "challenging, especially for smaller independent companies," and so consolidation was a attractive option to secure both companies' futures.
Approximately 160 million new Rockhopper shares will be issued for the merger.
On completion, Rockhopper shareholders will hold 65 per cent of the combined company's stock.
The existing management team of Rockhopper will remain the same with Tim Bushell, chief executive Officer of Falklands Oil and Gas, and John Martin, its chairman, joining the board of Rockhopper as non-executive directors.
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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," adding:
By combining Rockhopper and Falklands Oil and Gas, 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.
The merger is expected early next year after the two companies' boards have met to formally approve the deal, but both boards today said they intended to unanimously support the move.
The merger is an all-share deal, with no cash consideration.