Two companies are set to unite their efforts in drilling for oil offshore the Falklands Islands, after England-based Rockhopper agreed to an all-share acquisition of Falkland Oil and Gas. The deal values the company at ~$87 million. The deal will create the largest North Falkland Islands licence and discovered resource holder.
Rockhopper will issue Falkland investors 0.2993 of its stock for each of their shares- representing an 11% premium to Falkland’s closing share price on Monday.
“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,” Rockhopper Chairman Pierre Jungels said. “By combining Rockhopper and Falkland Oil & Gas, we shall create a more coherent license ownership structure in the North Falkland Basin.”
And Falkland O&G Chairman John Martin said, “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.”
Though the companies characterized the deal as a merger, Rockhopper’s management team will remain in charge of the combined company. Falkland O&G CEO Tim Bushell, and John Martin, its chairman, will become non-executive directors. Falkland O&G’s board has unanimously recommended the transaction to its shareholders.
Here’s a description of Rockhopper’s areas of operation off the Falklands Islands from the company’s website:
“Rockhopper’s operations in the Falkland Islands are focused in the North Falkland Basin where it holds a number of production licences.
“The Falkland Islands comprise some 340 islands and are situated in the South Atlantic approximately 300 miles to the East of South America. The Islands were discovered in 1592 by Captain Davis. The largest islands, East Falkland and West Falkland, comprise the bulk of the 12,000 sq. kms of land. The Capital, Stanley, is on the Eastern side of East Falkland Island.
“Six wells were drilled by other companies in the North Falkland Basin in 1998. Oil and gas shows were recorded in five of the six wells. The oil price was approximately $10 at the time and none of the wells were declared a commercial success.”