Rockhopper to Buy Mediterranean Oil & Gas
Falkland Islands-focused Rockhopper Exploration has agreed to buy Italy, France and Malta-focused explorer Mediterranean Oil & Gas (MOG) for $50 million (GBP 29.3 million) in a cash and shares deal, the firms reported Friday.
Explaining its reasons for the takeover, Rockhopper said that following the completion of the farm-out of its Sea Lion discovery to Premier Oil, and having conducted the preparation for the next exploration campaign in the North Falkland Basin, the Rockhopper directors are looking to use the skills and experience the company has acquired to develop opportunities elsewhere. The firm is also keen to establish a balanced portfolio of assets.
Providing Rockhopper with an entry into the Mediterranean region, the acquisition of MOG also gives the firm access to “material low-risk appraisal and development opportunities on existing discoveries”.
In particular, Rockhopper said that it sees “significant potential” in MOG’s 100-percent owned and operated Ombrina Mare project, offshore Italy, that already has 2C contingent resources of 26.5 million barrels of oil equivalent with “the ability for this to be increased materially depending on the results of the next planned appraisal well”.
Commenting on the acquisition, Rockhopper Chairman Pierre Jungels said in a company statement:
"This transaction represents an important milestone for the company as we add production to our portfolio and broaden our exploration and development opportunity set, by establishing ourselves in an area our team understands well. While the acquisition cost and capital exposure are modest in relation to our balance sheet, the upside potential is significant and we believe that the new acreage will create an attractive entry platform to one of the most exciting regions in the industry at this time."
MOG Non-Executive Chairman Keith Henry added:
"This is a good transaction for our shareholders, offering them the combination of both cash and shares in Rockhopper today, while also providing the opportunity to benefit from the potential upside of our Malta well. Sadly, a series of setbacks over the past year at the Guendalina Field, MOG's principal producing asset, and the continuing regulatory delays to Ombrina Mare, our key development project, have prevented us from implementing our strategy of growing our portfolio in the Mediterranean region.
"In the current market conditions, the MOG board strongly believes that this can only be achieved by a significantly more capitalized company. In addition to the cash element, Rockhopper's offer represents an opportunity for MOG shareholders to receive shares in Rockhopper, while still retaining a contingent interest in the high-risk exploration well offshore Malta that will spud in the next few days."
Analysts at London-based investment bank Westhouse Securities described the takeover as a "reasonably sensible" move. In a brief research note Friday morning they wrote:
"It is a small acquisition, but is cheap and gives [Rockhopper] exposure to an increasingly interesting and prospective province."
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