Rockhopper, Falkland Oil and Gas to merge

Rockhopper Exploration has agreed a deal to take over fellow Falklands explorer Falkland Oil and Gas (FOGL).

The move will make the combined company the largest North Falkland Islands license and discovered resource holder with a material working interest in all key licenses in the area, says Rockhopper.

This will also mean decision making on the Sea Lion discovery, which operator Premier Oil is working through front end engineering and design on, would be simpler.

Rockhopper shareholders will own about 65% of the combined company's shares and FOGL shareholders will own about 35%, following the deal.

The merger values FOGL at £57.1 million, an 11% premium to FOGL's closing share price of 9.60p yesterday.

Rockhopper's management team will remain the same, with Tim Bushell (Chief Executive Officer of FOGL) and John Martin (Chairman of FOGL) joining the board as non-executive directors. 

The deal requires shareholder approval and additional Rockhopper shares will be issued. 

Pierre Jungels, Rockhopper's chairman, said: "This transaction enhances Rockhopper's position in the Falkland Islands, with the largest regional acreage position and most discovered resources, coupled with a strong balance sheet. By combining Rockhopper and FOGL, we shall create a more coherent license ownership structure in the North Falkland Basin, driven by a technically accomplished organization with a strong exploration and appraisal track record, well positioned to access the opportunities in this emerging hydrocarbon province. The Rockhopper Board believes this Merger will also add further momentum to the on-going work to progress the development of discovered resources in the area towards commerciality."

FOGL's chairman John Martin said: "FOGL has built a significant portfolio of discovered resources in the Falkland Islands region despite the challenging market conditions. The enhanced scale, capabilities and financial position of the merged FOGL and Rockhopper entity will provide FOGL Shareholders with a platform from which to bring these quality resources into development."