ACQUISITIVE North Sea oil firm RockRose Energy is trying to ramp up its expansion with the second big move in the space of a month.
RockRose revealed yesterday it had tabled a £26 million takeover proposal for Independent Oil & Gas which had been spurned by directors of the firm.
Read more: Oil price fall creates North Sea acquisition opportunities for London firm
Independent said the proposal was opportunistic and materially undervalued the company and the potential of its acreage.
The suitor said shareholders in the target should be given the chance to consider the merits of its potential 20p per share cash offer.
News of the exchange sent shares in Independent surging around 30 per cent.
The dramatic development came days after RockRose Energy clinched a $140m (£107m) deal to buy US heavyweight Marathon Oil’s North Sea portfolio.
Read more: North Sea shake up to continue after $140m acquisition of US giant's assets
The Marathon deal will speed what is seen as a changing of the guard in the North Sea, in which some relative newcomers are expanding while established players reduce their exposure to the area.
It looks set to propel London-based RockRose into the big league.
Executive chairman Andrew Austin noted last month the acquisition would result in a big increase in RockRose’s production and give the firm the operating capability required to develop fields.
Independent is working on plans to develop gas finds.
RockRose has expanded rapidly after making a series of acquisitions since it was founded in 2015 amid the fallout from the crude price plunge that started in the preceding year.
Some firms decided the downturn created an opportunity to expand with assets being put up for sale at attractive prices as companies retrenched. The cost of support services fell sharply.
Independent acquired assets such as a stake in the Blythe gas field off eastern England and a disused pipeline in the area.
The acquisition of the Thames pipeline was seen as an important step in a plan hatched by Independent to bring a group of undeveloped gas finds in the Southern North Sea onstream.
Read more: Independent makes progress with plan to revive pipeline
However, the company has faced complications in its efforts to raise the funding required for the development.
Last month Independent noted a firm that provided funding for its primary financial backer had gone into administration. Independent has around £4m lending facilities undrawn from the backer concerned, London Oil & Gas.
The company said potential industry partners had shown strong interest in the Southern North Sea project.
But RockRose expressed doubts yesterday about whether Independent as a relatively small player would be able to conclude a farm out deal for what could be a £450m development on attractive terms.
The firm said a cash bid like the one rejected by Independent’s directors would allow shareholders to realise an immediate cash upside on their shareholdings, at a 51 per cent premium to the closing price on February 26, when it made its initial approach. It would also remove the risk for Independent shareholders of a protracted or unsuccessful farm-out process.
RockRose stressed it may not make an offer for Independent. It noted: “RockRose believes that all IOG shareholders should be given the opportunity to consider the merits of the potential offer.”
Independent said its directors had unanimously concluded to reject RockRose’s proposal unequivocally. The board’s rejection of RockRose’s approach was given with the full support of London Oil & Gas.
Directors continues to focus their efforts on unlocking value in the company by securing a farm-out partner for the core Southern North Sea project.
Shares in the firm closed up 4.62p at 18.75p.
Private equity investors have helped emerging players such as Chrysaor Energy buy big North Sea portfolios from the likes of Shell. Incumbents such as Premier Oil have also bought assets .
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