Elixir Petroleum & Gawler Resources to Merge
Elixir Petroleum and Gawler Resources Limited have agreed to merge their businesses to create a balanced, diversified oil and gas exploration and production ('E&P') company, listed on the ASX and AIM and capitalized at approximately A$35.0 million (£14.4 million) at today's share prices. Elixir shareholders will represent 52% of the enlarged company and Gawler shareholders the remaining 48%.
The merged group will combine emerging Gulf of Mexico production with high impact North Sea exploration. It will be well-funded, allowing the development of the producing assets to run in parallel with an active and highly prospective exploration program.
The Boards of Elixir and Gawler believe the benefits of the merger are compelling. These include:
- A 30% working interest in the High Island A268 oil and gas development project in shallow water offshore Texas, which is due to come on stream in September this year and initially expected to produce at gross rates of around 20 million cubic feet of gas per day;
- A portfolio of North Sea exploration licenses containing drillable prospects, which, if any one is successful, will provide significant upside to the group's valuation;
- Access to US deal flow where management has demonstrated the ability to source quality new projects to grow the business; and
- A board and management team with complementary skills and extensive experience in the technical, commercial and financial aspects of the international upstream industry
Commenting on the proposed merger, Russell Langusch, Elixir's Managing Director, said:
'This deal will give shareholders of both Elixir and Gawler immediate exposure to a more diversified portfolio of assets at varying stages of evaluation and development. Moreover, the combined group will have the balance sheet capacity necessary to pursue our expanded growth plans, facilitated later in the year by first production cashflow.'
The Chairman of Gawler Resources, Jon Stewart, commented:
'We believe the merger of Elixir and Gawler accelerates the aspirations of both companies to establish themselves as successful independent exploration and production companies. By the fourth quarter of 2007 we will have first production from High Island in the US and a UK exploration portfolio with significant upside. We will be looking to add additional near term development and production opportunities to the existing combined asset base.'
Elixir's exploration portfolio consists of interests in nine UK North Sea exploration licenses comprising nine blocks or part-blocks. Five of these licenses were awarded in the 23rd Licensing Round. In the year-ended June 30, 2006, Elixir made a loss of before tax of A$6.99 million on turnover of A$0.72 million. As at June 30, 2006, Elixir's net assets were A$13.21 million.
Gawler Resources was incorporated on 17 May 2006 initially for the purpose of exploring for uranium and base metals in Australia. Subsequently, it acquired a 30% working interest in the High Island oil and gas exploration development project in the offshore Texas Gulf of Mexico. As at December 31, 2006, the net assets of Gawler were A$3.36 million. In the six months to December 31, 2006, Gawler made a loss of A$0.18 million on nominal interest turnover.
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