Deltic Energy agrees recommended acquisition by Neo Next+

(Sharecast News) - Deltic Energy announced on Thursday that a recommended cash acquisition by Neo Next+ Energy Upstream UK had been agreed, in a deal valuing the AIM-listed North Sea investor at about £7.2m on a fully diluted basis.

Under the terms of the acquisition, Deltic shareholders would receive 7.7p in cash for each share, representing a premium of about 156.7% to the closing price of 3.0p on 21 April, the last trading day before the offer period began.

The deal was expected to be implemented by way of a court-sanctioned scheme of arrangement, although Neo Next+ reserved the right to proceed by takeover offer with the consent of the Takeover Panel.

The scheme was expected to become effective in the third quarter of 2026, subject to shareholder, court and regulatory approvals, including consent from the North Sea Transition Authority.

Neo Next+ had also agreed to provide Deltic with bridge financing of up to £2.9m to repay an existing bridging loan provided by RockRose Energy in connection with its earlier offer for Deltic, which lapsed on 31 March.

The new facility would carry interest of 10% per annum and be available solely for repayment of the RockRose facility and related costs.

Deltic said the offer followed a period of significant uncertainty for the company, which had been under pressure from funding constraints, deferred liabilities and continued uncertainty around the UK fiscal and policy environment for domestic oil and gas exploration.

The company has interests in offshore UK licences, including a 25% non-operated interest in the Selene gas discovery, which Deltic said had material long-term cash-flow potential but would require substantial further investment before first gas, currently estimated in early 2031.

Deltic said it had accrued debt and deferred liabilities of more than £5.5m, including the £2.7m RockRose bridge facility and deferred payments due to Adura in relation to Pensacola and Shell in relation to Selene.

Its unaudited cash balance had fallen to about £1.0m at 31 March, although it expected to receive a $1m payment from Dana Petroleum in May, contingent on Dana remaining a partner in the P2437 licence beyond 12 May.

The Deltic board said that, without the acquisition, the company would probably need to raise additional capital before August to fund its share of Selene work, meet deferred liabilities and cover corporate costs beyond the third quarter.

It said it did not have confidence in Deltic's ability to raise sufficient equity in current market conditions, and believed debt providers would be unwilling to provide the required facilities given the stage of its investments.

The directors said that, in the absence of alternative funding and if the acquisition did not proceed, Deltic would be in "an extremely challenging financial position" and could have no option but to enter administration.

Deltic's directors, advised by Allenby Capital, said the financial terms of the acquisition were fair and reasonable, adding that they intended to unanimously recommend shareholders vote in favour of the scheme.

Neo Next+ had also received irrevocable undertakings to support the deal from IPGL, RockRose, Lord Spencer of Alresford, Sarah Flavell and Deltic directors, representing in aggregate about 22.98% of Deltic's issued ordinary share capital.

The undertakings remained binding if a higher competing offer was made.

Neo Next+ said the acquisition was consistent with its strategy to consolidate ownership positions in the UK North Sea.

The wider group was described as the largest oil and gas producer on the UK Continental Shelf, with a 2P reserve base of 454.4 million barrels of oil equivalent at the end of 2025, and had announced five North Sea transactions since the start of last year.

"The acquisition of Deltic is consistent with our stated objective of continuing to consolidate ownership positions in the UK North Sea," said John Knight, chairman of Neo Next+.

"This transaction represents the 6th transaction of the wider Neo Next+ group since the beginning of 2025.

"The Deltic portfolio offers attractive future development potential which we will integrate into our wider portfolio of opportunities."

Deltic chief executive Andrew Nunn said the previous 12 months had been a period of significant uncertainty for the company, its shareholders, employees and other stakeholders.

"Following the lapsing of the proposed acquisition of Deltic by RockRose Energy, we received a number of approaches in relation to Deltic and its assets," he said.

"Neo Next+'s offer represents the best value and certainty for Deltic shareholders, and we are therefore delighted to have reached agreement on the terms of the acquisition which should also provide a good home for the quality assets the Deltic team has progressed in recent years."

Following completion, Neo Next+ intended to integrate Deltic's licence interests into its wider UK portfolio and work with Shell, the operator of Selene, to assess potential development of the discovery.

It also said the Dewar exploration opportunity was close to existing Neo Next+ infrastructure in the Central North Sea.

At 1400 BST, shares in Deltic Energy were up 27.62% at 6.7p.

Reporting by Josh White for Sharecast.com.

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