Rockhopper agrees merger with Falkland Oil and Gas

Rockhopper Exploration and Falkland Oil and Gas Ltd (FOGL) have agreed an all-share merger that will create a group with the largest licence ownership in the North Falkland Islands oil fields.

The merger will be effected by a takeover of FOGL by Rockhopper.

FOGL shareholders will receive 0.2993 Rockhopper shares for each share they own, meaning Rockhopper shareholders will own roughly 65% of the enlarged group and FOGL shareholders the remaining 35%.

Based on Rockhopper's Monday closing price of 35.75p, the deal values FOGL at just over £57m, and each FOGL Share at 10.7p, an 11% premium to their closing share price of 9.6p the day before but less than half their level in early October and a far cry from their 30p-plus levels reached in the spring.

The FOGL directors, advised by broker RBC Capital Markets, considered the terms of the merger to be fair and reasonable and unanimously recommended shareholders, of which they represent 9.4%, vote in favour of a combination at a meeting that is planned to be held "on or around" 14 December.

Rockhopper's management team will remain in place, with FOGL chief executive Tim Bushell and chairman John Martin joining the board as non-executive directors.

Rockhopper chairman Pierre Jungels said the enlarged group would possess 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 licence ownership structure in the North Falkland Basin, driven by a technically accomplished organisation with a strong exploration and appraisal track record, well positioned to access the opportunities in this emerging hydrocarbon province."