Deltic Energy PLC Statement by IOG & End of Offer Period (0868B)
October 05 2020 - 4:09AM
UK Regulatory
TIDMDELT TIDMIOG
RNS Number : 0868B
Deltic Energy PLC
05 October 2020
5 October 2020
Deltic Energy Plc/ Index: AIM / Epic: DELT / Sector: Natural
Resources
Deltic Energy Plc ("Deltic" or "the Company")
Statement by Independent Oil and Gas plc
End of Offer Period
Deltic Energy Plc, the AIM quoted natural resources investing
company with a high impact exploration and appraisal portfolio
focused on the Southern and Central North Sea, notes the
announcement made by Independent Oil and Gas plc ("IOG") stating
that IOG does not intend to make an offer for Deltic. Deltic is
therefore no longer deemed to be in an "offer period", as defined
in the City Code on Takeovers and Mergers.
The Board of Deltic received an initial approach from IOG in
late August 2020 regarding a proposal to effect an all share merger
of IOG and Deltic (the "Initial Proposed Merger"). The terms of the
Initial Proposed Merger implied an offer value at that time which
was less than Deltic's cash balance and as such placed no immediate
value on Deltic's significant portfolio of non-cash assets, not
least its interests in Pensacola and Selene, its two most advanced
prospects in which it is partnered to drill with Shell and where
Deltic benefits from a significant carry on each. This initial
approach from IOG made reference to a possible mechanism for
further value to accrue to Deltic shareholders, linked to
commercial success at Pensacola only, but did not include any
detail as to the quantum or structure of this mechanism.
The Board reviewed the terms of the Initial Proposed Merger with
its advisers and considered that the terms materially undervalued
Deltic, and it was rejected on 2 September 2020.
The Board of Deltic received a further proposal from IOG on 25
September 2020, with amended terms for a proposed all share merger
of the two companies (the "Amended Proposed Merger"). Whilst the
terms represented an improvement on those contained in the Initial
Proposed Merger, the terms implied a discount of greater than ten
per cent. to the market value of Deltic's ordinary shares based on
the closing mid-market price of a Deltic and IOG ordinary share on
24 September 2020, the day prior to the date on which the Amended
Proposed Merger was received. The Amended Proposed Merger terms
included a contingent value right proposal ("CVR Proposal") whereby
additional value could potentially accrue to Deltic shareholders
subject to Field Development Plan approval and first gas on
Deltic's Pensacola and Selene prospects. However, under the terms
of the CVR Proposal, the maximum value which could accrue to Deltic
shareholders in the event that first gas was achieved on each of
Pensacola and Selene was limited to GBP2 million per prospect,
equivalent to only 0.14 pence per ordinary share in the Company for
each of Pensacola and Selene.
The Board therefore decided that the Amended Proposed Merger was
not in the best interests of Deltic shareholders and it should
therefore be rejected. In coming to this decision, the Board
considered a range of factors and risks associated with the Amended
Proposed Merger and concluded that the terms continued to
materially undervalue Deltic and its portfolio of assets, which had
been further enhanced following the award of six additional
licences in the UK's 32(nd) Licensing Round which was announced on
3 September 2020.
IOG's announcement on 11 September 2020 is the second time a
company has made an announcement regarding a possible offer for
Company in recent months and in both cases the Board has concluded
the offers have materially undervalued the Company. During this
latest offer period, the Company had discussions with certain of
its key shareholders who expressed their continued support for the
Company.
The Company continues to focus on developing its recently
expanded portfolio of assets and strengthening its strategic
position in the Southern North Sea gas basin. The Shell-Deltic
partnership remains on track and committed to meeting the licence
terms of the Company's Pensacola prospect, with drilling expected
in the second half of 2021.
The Company also recently reported a significant upgrade to the
prospectivity and a reduction in risk associated with the Selene
Prospect and is focussed on recoverable volumes, economics and well
design work required to support the well investment decision, with
the well expected to be drilled in 2022.
Importantly, the Company remains fully funded for the drilling
of these two wells with Shell, with success on either being
transformational for the Company.
For further information please contact the following:
Deltic Energy Plc Tel: +44 (0) 20
7887 2630
Graham Swindells / Andrew Nunn/ Sarah McLeod
Allenby Capital Limited (Nominated Adviser Tel: +44 (0) 20
& Joint Broker) 3328 5656
David Hart / Alex Brearley / Asha Chotai
(Corporate Finance)
Kelly Gardiner (Equity Sales)
Stifel Nicolaus Europe Limited (Joint Broker) Tel: +44 (0) 20
7710 7600
Callum Stewart / Simon Mensley / Ashton
Clanfield
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