Directors at Falkland Islands explorers Rockhopper Exploration and Falkland Oil and Gas (FOGL) announced Tuesday that they have agreed to recommend an all-share merger of the two companies.
In a statement released to the London Stock Exchange, the firms' respective boards of directors said they believe that a combination of Rockhopper and FOGL represents "a compelling opportunity for shareholders of both companies to benefit from the significant value opportunity arising from the combination of their highly-complementary portfolios".
The companies pointed out that an enlarged business would be the largest player in the North Falkland Basin in terms of licenses and discovered resources and that it would also have enhanced prospects of progressing the development of the Sea Lion project, which was discovered in 2010. They also highlighted a greater exposure to exploration and appraisal upside potential as well as enhanced economies of scale from an operational point of view.
Commenting on the merger in a company statement Rockhopper Chairman Pierre Jungels 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 FOGL, we shall create a more coherent license ownership structure in the North Falkland Basin, driven by a technically-accomplished organization with a strong exploration and appraisal track record, well positioned to access the opportunities in this emerging hydrocarbon province.
"The Rockhopper board believes this merger will also add further momentum to the on-going work to progress the development of discovered resources in the area towards commerciality."
FOGL Chairman John Martin added:
"FOGL has built a significant portfolio of discovered resources in the Falkland Islands region despite the challenging market conditions. The enhanced scale, capabilities and financial position of the merged FOGL and Rockhopper entity will provide FOGL shareholders with a platform from which to bring these quality resources into development. As a result, the FOGL board intends unanimously to recommend that FOGL shareholders accept the proposed transaction."
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