Rockhopper Exploration plc, the oil and gas exploration and production company with interests in the North Falkland Basin and the Greater Mediterranean and North Africa region, announced the acquisition of a portfolio of non-operated production and exploration interests in Egypt from Beach Energy Limited for a headline consideration of US$22.0 million.
Rockhopper to acquire the entire issued share capital of Beach Petroleum (Egypt) Pty Limited (“Beach Egypt”) which on completion will hold:
o 22% interest in the Abu Sennan concession; and
o 25% interest in the El Qa’a Plain concession
Current working interest production from Abu Sennan of approximately 1,300 boepd, net to Rockhopper (based on average H1 2015 production levels)
2P plus 2C reserves and resources at the effective date of 1 July 2015 are estimated at 4.5 mmboe (management estimate), net to Rockhopper
Headline consideration of US$22.0 million to be satisfied:
o Approximately US$11.5 million in cash; and
o The issue of new fully-paid Rockhopper shares to the value of US$10.5 million, priced based on the volume weighted average price of Rockhopper shares during the 30 days prior to completion, subject to a maximum of 5% of the Company’s issued share capital (the “Rockhopper Consideration Shares”)
Implied transaction multiple of less than US$4.50 per barrel of oil equivalent (adjusting for estimated financial assets being acquired)
Rockhopper retains balance sheet strength post acquisition – forecast cash at end 2015 estimated at US$110 – 120 million
Transaction represents the continuation of Rockhopper’s strategy to build a full cycle E&P company focused on its two core areas and represents the Company’s entry into Egypt, a prolific hydrocarbon province
Acquisition anticipated to complete in late 2015 / early 2016 (subject to satisfaction of certain conditions), with consideration adjusted for net cash flow attributable to the assets since the effective date of 1 July 2015
Abu Sennan concession:
The Abu Sennan concession is located in the Abu Gharadig basin in the Western Desert. The concession was signed in June 2007 with first commercial production achieved during 2012 and cumulative oil production to date of approximately 1.9 million barrels. The concession remains underexplored with significant exploration and appraisal upside providing opportunities for near-term production additions. The concession partners are Kuwait Energy (50% and operator) and Dover Investments (28%).
El Qa’a Plain concession:
The El Qa’a Plain concession is located on the eastern shore of the Gulf of Suez and contains a number of oil leads identified on existing 2D seismic data. The concession was signed in January 2014 and the forward plan is to acquire 450 sq km of 3D seismic in 2015 followed by the drilling of one or more exploration wells in 2016. The concession partners are Dana Petroleum (37.5% and operator) and Petroceltic (37.5%).
The headline consideration for the Acquisition is US$22.0 million payable to Beach Energy through a combination of cash and the issue of the Rockhopper Consideration Shares. The cash element will be funded from the Company’s existing cash resources. The precise number of Rockhopper Consideration Shares issued will be based on the volume weighted average price of Rockhopper shares during the 30 days prior to completion, subject to a maximum of 14.8 million new Rockhopper shares (adjustable for new shares issued prior to completion), representing up to 5% of the Company’s issued share capital.
The actual sum payable at completion will be adjusted to take into account net cash flow attributable to the Interests from the effective date of 1 July 2015.
Unaudited revenue, EBITDA and profit after tax of $8.1 million, $6.3 million and $0.3 million respectively are attributable to the Interests in the 12 month period to 30 June 2015.
The Acquisition is expected to complete in late 2015 / early 2016 and is subject to the satisfaction of certain conditions precedent including completion of limited confirmatory due diligence, divestment by Beach Egypt of certain non-core assets, standard joint venture consents including pre-emption and Egyptian regulatory approvals.
Sam Moody, CEO, commented:
“This transaction represents another significant milestone as we continue to build Rockhopper into a full cycle, exploration led, E&P company focused on our two core areas of the North Falkland Basin and the Greater Mediterranean and North Africa region.
“We expect this portfolio to be net cash flow positive immediately and upon completion of the transaction expect operating cash flows from Egypt and our existing Italian assets to cover Group overheads going forward.
“Through the acquisition we have added 2P plus 2C reserves and resources at a net acquisition price of less than $4.50 per boe (after financial adjustments) whilst preserving our balance sheet and limiting dilution to shareholders to less than 5%.”
(Rockhopper Exploration Press Release)
Beach Energy Ltd announced that it has entered into a binding agreement with Rockhopper Exploration plc in relation to the sale of its wholly owned subsidiary, Beach Petroleum (Egypt) Pty Ltd, whose core asset is a 22% interest in the Abu Sennan Concession in Egypt.
Consideration will be up to US$22 million (subject to adjustments) comprising US$11.5 million cash, with the balance to be made up of Rockhopper shares. The share component will be limited to no more than 5% of Rockhopper’s issued capital.
Completion of the transaction is expected to occur in late 2015 / early 2016 and is dependent on satisfaction of certain conditions precedent, including Egyptian regulatory approvals, limited confirmatory due diligence, divestment of certain excluded non-core assets, and joint venture consents, including pre-emption. The divestment of the excluded assets is not expected to result in a material adjustment to the proceeds from this transaction.
Rockhopper is a leading UK based oil and gas exploration company with a market capitalisation of approximately US$275 million and a strong balance sheet. Rockhopper holds interests in the Falkland Islands and is expanding its presence in the greater Mediterranean and North African area.
The sale of Beach Petroleum (Egypt) Pty Ltd will result in an impairment to the book value of the Egyptian assets as part of finalisation of the FY15 results. This sale, as well as Beach’s recent exit from Romania, continues to build on the company’s strategy of focusing on Australia and nearby, where its core expertise can be leveraged to drive sustainable, value accretive growth.
(Beach Energy Press Release)