Petroleum Africa
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Wednesday, July 24, 2019
United Oil & Gas has proposed the acquisition of Rockhopper Egypt from Rockhopper Exploration. The company is offering a consideration of $16 million for the Rockhopper subsidiary.
The purchase includes a non-operated 22% interest in the Abu Sennan concession onshore Egypt, and the existing assets of the business at the effective date. As the process will trigger a reverse takeover under the AIM Rules, shares in United have been suspended.
The Abu Sennan concession is located in Egypt’s Western Desert region, it contains seven operational fields with 17 producing wells. Current gross production has recently been reported by Rockhopper Egypt at over 5,100 boepd (over 1,100 boepd net).
The directors believe there is significant potential to increase production through an infill drilling program which is currently in progress. This has already been reported by Rockhopper Egypt to have boosted gross production by over 1,000 boepd since the beginning of the year, compared to average gross production of 3,700 boepd for 2018.
In addition to the seven production concessions, the Abu Sennan concession also contains a large exploration area, with a significant prospect and lead inventory. The historic drilling success rate on the concession has been 80%.
Under the proposed acquisition United would pay a deposit of $0.3 million, due upon the signing of the Sale and Purchase Agreement. A further $15.7 million is payable upon completion of the transaction.
In addition, United has entered into an offtake agreement with BP in relation to United’s future oil and gas production.
Brian Larkin, CEO of United Oil and Gas, commented, “This is a truly transformational deal for United. Not only will it deliver our first production, positive cashflow and significant reserves it also offers very promising infill and exploration upside. 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.
“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.
“In addition, we are very pleased with BP’s support for the deal, through the provision of acquisition finance, and we look forward to developing future business together.
“At completion, this Transaction will create a substantially larger company and this production deal will contribute to the significant development potential within our existing asset base. Our goal as a management team has been to build a full cycle, oil and gas exploration and production company which delivers exceptional value for our shareholders. This Transaction is an important step in the realization of that goal.”
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