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(Alliance News) - United Oil & Gas PLC on Monday said it has conditionally raised USD6.3 million to part-fund its USD16 million purchase of Rockhopper Egypt Pty Ltd from Rockhopper Exploration PLC.
Rockhopper Egypt holds a 22% non-operated interest in the Abu Sennan concession, which will deliver around 1,100 barrels of oil equivalent per day net low-cost production once complete. The concession is currently producing.
Rockhopper Egypt's net working interest in the proved and probable reserves at Abu Sennan was 2.7 million barrels of oil equivalent at mid-2019, with an infill and exploration upside.
An interest in Abu Sennan will give Unite Oil & Gas exposure to the development and appraisal well programme there, which aims to scale up production and add reserves, with gross production levels already at around 5,000 boepd versus 4,000 boepd at the start of 2019.
United Oil & Gas has undertaken a conditional equity offer, raising USD6.3 million gross through the issue of 159.0 million new shares at 3 pence per share. Of these, 150.6 million were conditionally places by joint brokers Optiva Securities Ltd and Cenkos Securities PLC while the remaining 8.4 million were subscribed for by existing shareholders and two directors.
The funding package for the Rockhopper Egypt acquisition includes prepayment financing of up to USD8 million from BP Group PLC, with which United Oil & Gas has entered an offtake agreement for United's future production.
United Oil & Gas also will issue 114.5 million new shares worth USD4.5 million to Rockhopper Exploration. The 114.5 million shares will represent around 18.5% of United Oil & Gas's enlarged share capital.
The Rockhopper-United deal was announced in July, at which point United Oil & Gas's shares were suspended. This suspension has now been lifted and its shares were down 26% at 3.00 pence in London on Monday.
A general meeting will be held n December 23 to obtain approval for the deal from United oil & Gas shareholders.
Brian Larkin, chief executive at United Oil & Gas, said: "The Rockhopper Egypt acquisition is a transformational development step for our company. Upon completion of this deal, United will have material production which will generate significant cash flow for reinvestment into the business."
He added: "We also gain exposure to an exciting fully funded development programme in Egypt which includes four wells in 2020. Along with activity across our wider portfolio, including the potential for future production from Italy and moving our Jamaican asset forward, we expect 2020 will not be short of significant news flow across our asset base. We are now on track to transform United into a highly cash generative and asset backed business, and I would like to thank shareholders for their support so far, especially with reaching this important milestone in United's journey."
Rockhopper Exploration noted the conditional completion of the equity raise and stated that once the deal completes, it will be entitled to appoint a United Oil & Gas board member so long as it holds at least a 10% stake.
Rockhopper continues to have projects in the North Falkland Basin and the Greater Mediterranean region.
Rockhopper Exploration shares were down 7.2% at 15.00 pence in London on Monday afternoon.
By Anna Farley; annafarley@alliancenews.com
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