United Oil updates market on proposed Rockhopper Egypt purchase

United Oil & Gas published its circular comprising an admission document relating to the proposed acquisition of Rockhopper Egypt, and to the readmission of its ordinary shares to trading on AIM on Monday.

The AIM-traded firm announced on 23 July that it had entered into a binding conditional sale and purchase agreement with Rockhopper Exploration to acquire the entire issued share capital of Rockhopper Egypt, which owns a 22% non-operated working interest in the Abu Sennan Concession and associated development leases in Egypt, with an effective date of 1 January 2019, and with trading in its ordinary shares suspended on that day.

It said the consideration for the Rockhopper acquisition was $16m (£12.2m) in accordance with the terms of the Rockhopper acquisition agreement.

A deposit of $0.3m had been paid on signing, and the balance of $15.7m would be satisfied in cash and consideration shares at completion, conditional on shareholder approval at the general meeting and upon EGPC and the Minister of Petroleum and Mineral Resources of Egypt providing the deed of assignment to the Rockhopper acquisition and admission.

As part satisfaction of the acquisition consideration, United announced on Monday that it has conditionally raised $6.25m (£4.8m) gross by the issue of a total of 159,036,167 new ordinary shares in the capital of the company, at a price of 3p per share.

It said 150,616,669 new ordinary shares had been conditionally placed by its joint brokers Optiva Securities and Cenkos Securities with institutional and other investors.

A total of 8,419,498 new ordinary shares had been conditionally subscribed for by certain existing shareholders of the company and two directors.

It added that 114,503,817 million new ordinary shares would be issued to Rockhopper as part-payment for the acquisition.

“The Rockhopper Egypt acquisition is a transformational development step for our company,” said United chief executive officer Brian Larkin.

“Upon completion of this deal, United will have material production which will generate significant cash flow for reinvestment into the business. In addition, we look forward to announcing the completion of our Crown divestment before the year end.

“We also gain exposure to an exciting fully funded development programme in Egypt which includes four wells in 2020.”

Larkin said that, along with activity across its wider portfolio, including the potential for future production from Italy and moving its Jamaican asset forward, the board expected 2020 would “not be short of significant news flow” across its 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.”