TIDMSOU TIDMAEY
RNS Number : 7473X
Sound Oil PLC
24 November 2014
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
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JURISDICTION
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES
24 November 2014
Sound Oil plc
("Sound Oil" or the "Company")
Intended offer for Antrim Energy Inc.
Sound Oil, the European focused upstream oil and gas company,
announces that it intends to launch a public offer (the "Intended
Offer") for 100 per cent. of the share capital of Antrim Energy
Inc. ("Antrim").
The combined business would leverage Sound Oil's technical,
financial and commercial expertise to maximise the potential of the
combined group, creating a high impact exploration company with
producing assets generating revenue covering its cost base and with
both the scale and geographic diversity to appeal to a wider range
of institutional and retail investors.
Sound Oil's strategy is to build a pan-European oil and gas
business of scale, leveraging off its strong Italian portfolio.
Sound Oil views a combination of Antrim and Sound Oil as
representing an attractive step in the implementation of this
strategy. Sound Oil believes the transaction has the potential to
create significant value for both sets of shareholders. In
particular, a combination would:
-- Add a third significant exploration asset (the offshore
Skellig Block in Ireland) to Sound Oil's existing exploration
portfolio (including the Badile and Zibido prospects in Italy). The
prospect in Ireland is due to commence drilling in 2016 and
therefore dovetails with the 2015 drilling of Badile, providing
shareholders with exposure to multiple exploration prospects;
-- Combine two strong balance sheets to create a larger European
focused upstream vehicle with a pro forma cash balance of circa
GBP23M through which further asset or corporate acquisitions can be
undertaken;
-- Secure wider (institutional and retail) investor appeal due
to increased scale, increased newsflow and trading liquidity;
and
-- Capture significant cost synergies, leveraging off Sound
Oil's strong team and European presence. This includes the closure
of Antrim's Calgary office and associated headcount reduction.
The Offer:
The Intended Offer for Antrim would:
-- Offer for each Antrim share, 0.3198 new Sound Oil ordinary shares.
-- Value each Antrim share at 3.44p (based on the closing market
price of 10.75p per Sound Oil share on 21 November 2014 on the AIM
market of the London Stock Exchange, (the last business day
preceding this announcement). This values the entire issued share
capital of Antrim at approximately GBP6.35M.
Sound Oil reserves the right to change the terms of the Intended
Offer.
Background to the Intended Offer:
Following a number of financial transactions, the divestment of
its producing UK subsidiary and the restructuring of its Calgary
based executive team, Antrim's market capitalisation has fallen to
less than GBP6M, below its net cash as at 30 September 2014. The
Board of Sound Oil believes that this creates a situation where
Antrim has:
-- ongoing costs which represent a disproportionate and unsustainable share of Antrim's market capitalisation;
-- reduced appeal and credibility as a standalone investment
proposition and as a partner to other oil and gas companies;
-- geographic disconnect between its Calgary management team and its European assets; and
-- a reduced ability to technically and commercially execute its work programme.
Sound Oil submitted an indicative proposal to the Board of
Antrim at the end of October with a view to making a recommended
all share offer to combine the two companies. However, the Board of
Antrim has not responded to this indicative proposal and appears
only prepared to engage in discussions if Sound Oil agrees to
restrict its ability to proceed with a public offer. The Company
strongly believes that the proposed combination is in the interests
of both sets of shareholders.
Having been unsuccessful in securing continued engagement with
the Board of Antrim and given the strong commercial logic of the
transaction, the Board of Sound Oil has decided to announce its
Intended Offer for Antrim.
James Parsons, Sound Oil's Chief Executive Officer,
commented:
"Over the last two years, Sound Oil has built a high quality
European team with solid foundations in Italy. Sound Oil now
manages a balanced portfolio which combines solid production with
low risk appraisal and significant exploration potential. The
Company is approaching a very busy 2015 drill programme, which
includes the drilling of the Badile prospect (Euro 486M NPV10) and
the securing of first gas from our flagship Nervesa discovery.
By combining with Sound Oil, Antrim's portfolio can be managed
as part of a wider European portfolio and run by a Europe based
team with a strong track record of delivering value to
shareholders. The combination provides a pan European platform to
enable further consolidation in the sector whilst delivering a more
diverse portfolio, added scale and increased investor appeal.
We are excited by the potential of the combined group and
believe that the Intended Offer is enhancing to both sets of
shareholders."
Further information on Sound Oil
Sound Oil is a well-funded European business with a balanced
Italian gas portfolio consisting of low risk existing discoveries,
high upside exploration and cost-covering production. The Company
expects to end 2014 with some GBP13M cash. The recent investment
via Continental Investment Partners allows Sound Oil to drill the
Badile exploration prospect, whilst a reserve based lending
facility has recently been arranged to fully fund Sound Oil's
commitments to a second appraisal well at Nervesa. Additional
drilling will be undertaken at Laura and Santa Maria Goretti in the
near term. Furthermore, the Company has recently brought a second
producing asset on-stream at Casa Tiberi, in addition to the
existing Rapagnano production. Sound Oil's recent activity has
demonstrated the Company's ability to secure permits in Italy and
safely and successfully execute complex drilling programmes. The
Company's portfolio provides a solid platform for growth in Europe
from which to deliver its objective of creating significant total
shareholder return.
Further information on Sound Oil may be found on the Company's
website: www.soundoil.co.uk
Further information on Antrim
Antrim is a Canadian-based international oil and gas exploration
company whose principal asset is the Skellig Block offshore Ireland
(25% interest). Further information on Antrim's operations may be
found on Antrim's website: www.antrimenergy.com. Antrim's shares
are traded on the TSX Venture Exchange and on AIM; Antrim's
unaudited interim financial report for the nine months ended 30
September 2014 showed revenue of nil, pre-tax loss from continuing
operations of US$5.7M, cash and cash equivalents (before disclosed
liabilities including decommissioning and severance) of US$16.8M
and net assets of US$12.7M.
Gerry Orbell is a non-executive director of both Sound Oil and
Antrim. Dr Orbell has confirmed that he has not participated in
deliberations and discussions concerning the Intended Offer either
as a member of the Board of Sound Oil or of Antrim, and will not do
so in the future.
For further information please contact:
Sound Oil j.parsons@soundoil.co.uk
James Parsons, Chief Executive
Officer
Vigo Communications - PR Adviser Tel: +44 (0)20 7016 9573
Patrick d'Ancona
Chris McMahon
Peel Hunt - Financial Adviser Tel: +44 (0)20 7418 8900
and Broker
Richard Crichton
Charles Batten
Smith & Williamson - Nominated Tel: +44 (0)20 7131 4000
Adviser
Azhic Basirov
David Jones
Ben Jeynes
Peel Hunt LLP, which is authorised and regulated in the United
Kingdom by the Financial Conduct Authority, is acting as financial
adviser to Sound Oil and no one else in connection with the
Intended Offer and will not be responsible to any person other than
Sound Oil for providing the protections afforded to clients of Peel
Hunt LLP, nor for providing advice in relation to the Intended
Offer or any matters referred to herein.
This announcement is not intended to, and does not, constitute
or form part of any offer, invitation or the solicitation of an
offer to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of, any securities, or the solicitation of any
vote or approval in any jurisdiction, pursuant to this announcement
or otherwise. Any offer will be made solely by certain offer
documentation, which will contain the full terms and conditions of
any offer, including details of how it may be accepted.
The distribution of this announcement in jurisdictions other
than the United Kingdom and Canada and the availability of the
Intended Offer to shareholders of Antrim who are not resident in
the United Kingdom or Canada may be affected by the laws of
relevant jurisdictions. Therefore any persons who are subject to
the laws of any jurisdiction other than the United Kingdom or
Canada or shareholders of Antrim who are not resident in the United
Kingdom or Canada will need to inform themselves about, and
observe, any applicable requirements.
This announcement contains forward-looking statements regarding
the Intended Offer, expected future earnings, revenues, cost
savings, operations, and other such items, based on Sound Oil's
plans, estimates and projections. These forward-looking statements
involve risks and uncertainties that could cause actual results to
differ materially from those predicted in any such forward-looking
statements. Such factors, include, but are not limited to, the
possibility that the Intended Offer will not be pursued, failure to
obtain necessary regulatory approvals or required financing or to
satisfy any of the other conditions to the combination, adverse
effects on the market price of Sound Oil's shares and on Sound
Oil's operating results because of a failure to complete the
combination, failure to realise the expected benefits of the
combination, negative effects of announcement or consummation of
the combination on the market price of Sound Oil's shares,
significant transaction costs and/or unknown liabilities and
general economic and business conditions that affect the combined
companies following the combination. Sound Oil disclaims and does
not undertake any obligation to update or revise any
forward-looking statement in this announcement except as required
by applicable law or regulation.
The NPV10 estimate for Badile shown above is based on a P50
estimate of recoverable gas and is sourced from the October 2013
Competent Persons Report prepared by ERC Equipoise. NPV10 refers to
a net present value at a discount rate of 10%; P50 refers to a 50%
chance of finding a given volume, consistent with SPE (The Society
of Petroleum Engineers) guidelines. The geological information in
this announcement has been reviewed by Sound Oil's Italian Managing
Director, Luca Madeddu, a qualified petroleum geologist.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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