United Oil and Gas (PLC), an Irish-traded oil and gas exploration and development company, has announced a plan to acquire of Rockhopper Egypt Ltd from Rockhopper Exploration Plc in a deal worth $16 million.
The purchase, according to a statement issued on Wednesday, includes a non-operated 22 percent interest in the Abu Sennan concession in Egypt, as well as the existing assets of the business.
The transaction comprises a deposit of $0.3 million, payable on the signing of the sale and purchase agreement, while a further $15.7 million is payable upon completion of the transaction, according to the statement.
The balance sheet on the effective date includes cash of $0.65 million and receivables of $1.7 million, adding that the cash consideration for the transaction is $16 million, which is to be funded through a combination of prepayment finance, equity in United and the company's existing cash resources.
"This is a truly transformational deal for United. Not only will it deliver our first production, positive cash flow and significant reserves, but, it also offers very promising infill and exploration upsides. Having reviewed many opportunities in the last 18 months, Rockhopper Egypt was by far and away the most exciting opportunity and the best strategic fit for our business,” CEO of United Oil and Gas Brian Larkin said.
Larkin added that United has already built a world class portfolio of assets, combining high impact exploration in Jamaica and Benin, with low risk, low cost European assets in the UK and Italy. This diverse portfolio is already offering shareholders a range of options for value enhancement. The proposed acquisition announced today would deliver production and cash flow to this already impressive stable.
The balance of the cash component of the transaction cost, along with working capital, will be funded by a placing of new ordinary shares in United Company, along with the use of existing cash resources, including the proceeds from the Company's recently announced Crown divestment.
Rockhopper Exploration Plc has agreed to accept up to $5 million in consideration shares. Any consideration shares held by Rockhopper in United are subject to certain lock-up and orderly market disposal provisions for a period of up to 12 months from completion, according to Larkin.