Malta oil drillers acquired by new oil explorers

Oil exploration firm Rockhopper Exploration has announced the entire share capital of Mediterranean Oil & Gas plc, the company that is currently drilling for oil offshore Malta.

The entire issued share capital has been valued at GBP 29.3 million, a 15.6% premium on MOG’s closing share price.

MOG said that “setbacks” encountered in their Italian interest had forced them to curtail their exploration efforts in the Mediterranean, paving the way for Rockhopper – currently focussed in the North Falklands, off Argentina – to acquire its exploration interests in the Mediterranean.

Rockhopper will also pay MOG shareholders an additional, contingent offer depending on the success of the exploration well targeting the Hagar Qim prospect, offshore Malta.

The offer is an unsecured, interest-free obligation of Rockhopper to make an additional one-off cash payment of between GBP11.9 million and GBP16 million in total, if the Hagar Qim prospect exceeds 80 million barrels of oil a day, the level Rockhopper directors consider to be commercially viable.

Rockhopper’s principal asset is a 5,800 square kilometres of prospective oil and gas acreage in the North Falkland basin.

MOG produces natural gas onshore and offshore in Italy and has a balanced portfolio of exploration, appraisal and development opportunities in Italy, Malta and France.

The Maltese government has yet to give its consent to the change in ownership, which will mean taking over MOG subsidiary Melita Exploration.

Commenting on the Acquisition, Keith Henry of MOG said: “sadly, a series of setbacks over the past year at the Guendalina Field, MOG’s principal producing asset, and the continuing regulatory delays to Ombrina Mare, our key development project, have prevented us from implementing our strategy of growing our portfolio in the Mediterranean region.”

Henry said that in the current market conditions, the MOG board strongly believed that it needed a significantly more capitalised company. “Rockhopper’s offer represents an opportunity for MOG shareholders to receive shares in Rockhopper, while still retaining a contingent interest in the high risk exploration well offshore Malta that will spud in the next few days.”

Rockhopper chairman Pierre Jungels said the transaction represented an important milestone for the company.

“We add production to our portfolio and broaden our exploration and development opportunity set, by establishing ourselves in an area our team understands well. While the acquisition cost and capital exposure are modest in relation to our balance sheet, the upside potential is significant and we believe that the new acreage will create an attractive entry platform to one of the most exciting regions in the industry at this time.”