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(Alliance News) - Shares in United Oil & Gas PLC were suspended on Tuesday as it announced a "truly transformational" acquisition from oil and gas explorer Rockhopper Exploration PLC.
UOG is to buy Rockhopper's Egyptian subsidiary, which owns a 22% interest in the Abu Sennan concession. It will pay USD16 million, with a USD8 million prepayment financing structure coming from BP PLC.
Abu Sennan includes a large exploration area, UOG said, and the other partners are Kuwait Energy, which operates the site and has a 25% stake, Global Connect Ltd with 25% and Dover Investments with 28%.
Abu Sennan produced around 813 barrels of oil equivalent per day net to Rockhopper in 2018, Rockhopper said, generating revenue of USD6.2 million.
UOG is also to raise cash through a share issue to fund the rest of the deal, without specifying how much it will raise. If there is a shortfall between the amount raised, the already paid cash element, and the USD16 million total, UOG will make it up by issuing shares directly to Rockhopper.
As part of the financing from BP, UOG has also signed an offtake agreement with the oil major.
UOG Chief Executive Brian Larkin said: "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," Larkin added.
UOG shares have been suspended as the takeover has been deemed a reverse takeover under AIM rules. Rockhopper was down 3.4% at 23.14 pence Tuesday morning.