United Oil & Gas PLC Rockhopper Acquisition & Conditional Fundraise (1232W)

TIDMUOG

RNS Number : 1232W

United Oil & Gas PLC

09 December 2019

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD VIOLATE THE RELEVANT SECURITIES LAWS OF SUCH JURISDICTION.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN UNITED OIL & GAS PLC OR ANY OTHER ENTITY IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS DISTRIBUTION SHALL FORM THE BASIS OF, OR BE RELIED ON, IN CONNECTION WITH ANY INVESTMENT DECISION IN RESPECT OF UNITED OIL & GAS PLC.

IN ADDITION, MARKET SOUNDINGS, AS DEFINED IN MAR, WERE TAKEN IN RESPECT OF THE PROPOSED PLACING AND SUBSCRIPTION WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF INSIDE INFORMATION, AS PERMITTED BY MAR. THAT INSIDE INFORMATION IS SET OUT IN THIS ANNOUNCEMENT AND HAS BEEN DISCLOSED AS SOON AS POSSIBLE IN ACCORDANCE WITH PARAGRAPH 7 OF ARTICLE 17 OF MAR. THEREFORE, THOSE PERSONS THAT RECEIVED INSIDE INFORMATION IN A MARKET SOUNDING ARE NO LONGER IN POSSESSION OF INSIDE INFORMATION RELATING TO THE COMPANY AND ITS SECURITIES.

United Oil & Gas PLC / Index: AIM / Epic: UOG / Sector: Oil & Gas

9 December 2019

United Oil & Gas PLC ('United' or 'UOG' or 'the Company')

Publication of Admission Document, Restoration of Trading, Conditional Fundraise, Update on Rockhopper Acquisition and Notice of General Meeting

Highlights

-- Publication of Admission Document relating to proposed acquisition by United of Rockhopper Egypt Pty Ltd ("Rockhopper Egypt") for consideration of US$16 million with an effective date of 1(st) January 2019

-- Rockhopper Egypt holds a 22% non-operated interest in the producing Abu Sennan concession; which on completion will deliver:

o c. 1,100 boepd net low-cost production with 2.66 million boe net working interest 2P Reserves at mid-2019 to United plus infill and exploration upside

o exposure to ongoing low risk development and appraisal well programme focused on scaling up production and adding reserves - gross production levels have increased to c. 5,000 boepd from 4,000 boepd at the start of 2019

-- Temporary suspension of trading in the Company's Ordinary Shares expected to be lifted at 7.30 a.m. today, 9 December 2019

-- Conditional issue of equity to raise US$6.25 million (approximately GBP4.8 million) gross by the issue of 159,036,167 new Ordinary Shares in United at a price of 3 pence per Ordinary Share as part of funding package for the acquisition which also includes:

o a prepayment financing structure of up to US$ 8million provided by the BP Group

o the issue of 114,503,817 million new ordinary shares (US$4.5 million) to Rockhopper Exploration PLC, which are subject to certain lock-up and orderly market disposal provisions for up to a period of 12 months from completion.

-- Admission Document posted on Friday, 6(th) December 2019 to Shareholders convening a General Meeting to be held at 10.00 a.m. (UK time) on 23 December 2019 at 200 Strand, London WC2R 1DJ to approve Rockhopper Acquisition

United Oil & Gas PLC (AIM: "UOG"), the AIM traded oil and gas exploration and development company, is pleased to announce the publication of its circular comprising an admission document (the "Admission Document") relating to the proposed acquisition of Rockhopper Egypt Pty Ltd ("Rockhopper Egypt") (the "Rockhopper Acquisition") and to the re-admission of the Company's ordinary shares ("Ordinary Shares") to trading on the AIM market ("Admission"). The Admission Document can be viewed at www.uogplc.com. Following publication of the Admission Document, the temporary suspension of trading in the Company's Ordinary Shares is expected to be lifted at 7.30 a.m. today, 9 December 2019.

On 23 July 2019, the Company announced that it had entered into a binding conditional sale and purchase agreement with Rockhopper Exploration plc ("Rockhopper PLC") to acquire the entire issued share capital of Rockhopper Egypt, which owns a 22 per cent. non-operated working interest in the Abu Sennan Concession and associated development leases in Egypt, with an effective date of 1 January 2019 and trading in the Ordinary Shares was suspended on that day. The consideration for the Rockhopper Acquisition is US$16 million (approximately GBP12.2 million) in accordance with the terms of the Rockhopper Acquisition Agreement. A deposit of US$0.3 million has been paid on signing and the balance of US$15.7 million is to be satisfied in cash and Consideration Shares at Completion conditional on, inter alia, 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 is pleased to announce that it has conditionally raised US$6.25 million (approximately GBP4.8 million) gross by the issue of a total of 159,036,167 new Ordinary Shares in the capital of the Company at a price of 3 pence per Ordinary Share. 150,616,669 new Ordinary Shares have been conditionally placed by the Company's joint brokers Optiva Securities Limited ("Optiva") and Cenkos Securities Plc ("Cenkos"), on behalf of the Company with institutional and other investors (the "Placing"). 8,419,498 new Ordinary Shares (the "Subscription Shares") have been conditionally subscribed for by certain existing shareholders of the Company and two Directors as detailed below (the "Subscription"). 114,503,817 million new ordinary shares will be issued to Rockhopper PLC as part payment for the acquisition.

Brian Larkin, CEO, said: "The Rockhopper Egypt Acquisition is a transformational development step for our Company. 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. Along with activity across our wider portfolio, including the potential for future production from Italy and moving our Jamaican asset forward, we expect 2020 will not be short of significant news flow across our 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."

Information on Rockhopper Egypt

Rockhopper Egypt holds a 22 percent. working interest in the Abu Sennan Concession which lies in the Western Desert in Egypt. Kuwait Energy, now owned by United Energy Group Ltd, holds 25 percent. through its subsidiary company Kuwait Energy Egypt and is the operator. The other partners in the Contractor Group are Global Connect Ltd, holding a 25 per cent. interest, and Dover Investments Ltd, holding a 28 per cent. interest. Kuwait Energy carries all of Dover's costs related to the concession, and in return is entitled to receive Dover's share of the cost oil plus 7.5 percent. of Dover's share of the profit oil attributed to the Contractor Group.

The Abu Sennan concession is governed by a Production Sharing Contract (PSC). Seven development leases have been awarded covering the eight fields that have been discovered and put into production. An exploration licence covers the rest of the concession area.

The oil and gas Reserves attributable to Abu Sennan are shown below, both as gross (100 percent.) field volumes and net to the 22 percent. interest to be acquired by UOG.

An ongoing infill drilling campaign has had considerable success to date as gross production levels have increased from 4,000 boepd at the start of 2019 to c. 5,000 boepd at present. Recent drilling results from the Bahariya reservoir of the Al Jahraa Field highlight the infill potential across the seven production concessions.

Funding of the Rockhopper Acquisition

The Rockhopper Acquisition is funded by the issue of Consideration Shares, the BP facility and from the net proceeds of the Placing and Subscription.

Consideration Shares

Rockhopper PLC has agreed to take US$4.5 million as part payment of the Consideration for the Rockhopper Acquisition. Accordingly, on Completion the Company will issue to Rockhopper Exploration PLC 114,503,817 Consideration Shares at 3 pence representing 18.5% of the Company's Enlarged Ordinary Share Capital on Admission.

Pursuant to the terms of the Rockhopper Acquisition Agreement and subject to the number of Consideration Shares held by or on behalf of Rockhopper PLC being 3 percent. or more of the entire issued ordinary share capital of the Company on and following Admission, Rockhopper PLC has agreed with the Company that it will only dispose of any interest in the Consideration Shares for a period of 12 months from Admission in accordance with an orderly market arrangement commencing three months from Admission and through the Company's broker, unless such disposals are with the prior written consent of the Buyer.

For as long as Rockhopper holds 10 per cent. or more of the entire issued share capital of the Company it is entitled to appoint a director to the Board subject to the regulatory approval of the Company's nominated adviser.

BP facility

BP has agreed to provide the Company with a pre-payment financing structure of up to US$8 million, transacted under a 2002 ISDA Master Agreement. Pursuant to the terms of the BP facility, the Company will make repayments over 30 calendar months based upon dated Brent market prices for an agreed volume, capped at an agreed level. The financing structure will generate an upfront payment to the Company that will be used to fund part of the Rockhopper Acquisition and in addition, will hedge a portion of the Company's production during the term of the pre-payment while allowing the Company to benefit from market prices above the capped price for the pre-payment volume. The Company intends to draw down the full amount under the BP facility (US$8 million), on or prior to Completion, to fund the Rockhopper Acquisition.

Placing

The Company has conditionally raised approximately GBP4.5 million (US$5.9 million), before expenses (GBP4.3 million (approximately (US$5.6 million) net of Placing expenses) through the Placing of 150,616,669 Placing Shares at 3 pence per Placing Share from certain existing and new investors.

Pursuant to the Placing Agreement entered into by the Company, Beaumont Cornish, the Directors, Cenkos and Optiva on 6 December 2019 the Placing of the Placing Shares is conditional, inter alia, on:

   --     the passing of the Resolutions to be proposed at the General Meeting; 

-- compliance by the Company in all material respects with its obligations under the Placing Agreement;

   --     the Rockhopper Acquisition Agreement becoming unconditional save for Admission; and 

-- Admission having occurred by no later than 8.00 a.m. on 6 January 2020 or such later time as agreed between Beaumont Cornish, Cenkos and Optiva not being later than 4.00 p.m. on 31 January 2020.

Under the Placing Agreement, which may be terminated by Beaumont Cornish, Cenkos and Optiva in certain circumstances (including force majeure) prior to Admission, the Company and the Directors have given certain warranties and indemnities to Beaumont Cornish, Cenkos, and Optiva concerning, inter alia, the accuracy of information contained in the Document.

Subscription

Certain existing shareholders of the Company and two Directors, Graham Martin and David Quirke have agreed to subscribe for an aggregate amount of 8,419,498 Subscription Shares at the Subscription Price which is equal to the Placing Price.

Graham Martin and David Quirke have each subscribed for 2,000,000 Subscription Shares and 833,333 Subscription Shares respectively at the Subscription Price on the same terms as the other Subscribers as part of the Subscription.

The Subscription is conditional, inter alia, on:

   --     the passing of the Resolutions to be proposed at the General Meeting; 
   --     the Rockhopper Acquisition Agreement becoming unconditional save for Admission; and 

-- Admission having occurred by no later than the long stop date as defined in the Rockhopper Acquisition Agreement.

The issue of the Placing Shares, the Subscription Shares and the Consideration Shares is conditional, inter alia, on the passing of the Resolutions at the General Meeting, the Rockhopper Acquisition Agreement becoming unconditional and Admission.

The Placing Shares, the Subscription Shares and the Consideration Shares will rank pari passu in all respects with Existing Ordinary Shares including all rights to dividends and other distributions declared, made or paid following Admission and will be issued as fully paid.

The Company's Enlarged Ordinary Share Capital will comprise 619,153,969 Ordinary Shares on Admission.

Application will be made to the London Stock Exchange for the Enlarged Ordinary Share Capital of the Company to be admitted to trading on AIM.

Admission of the Enlarged Ordinary Share Capital to trading on AIM, which is subject to the passing of the Resolutions at the General Meeting, the Rockhopper Acquisition Agreement becoming unconditional and Admission, is expected to take place on or about 6 January 2020 and a further announcement confirming the Admission date will be made in due course.

Use of Proceeds

The net proceeds of the Placing and the Subscription together with the drawdown under the BP facility, totalling approximately US$13.7 million (approximately GBP10.5 million), will be used to fund the cash element of the Consideration for the Rockhopper Acquisition, costs of the Rockhopper Acquisition, Admission and working capital requirements of the Enlarged Group, as follows:

 
                                             GBP million   US$ million 
 Consideration for Rockhopper Acquisition 
  (cash element)                                     8.8          11.5 
 Costs of the Rockhopper Acquisition and 
  Admission                                          0.6           0.8 
 General working capital                             1.1           1.4 
 Total                                              10.5          13.7 
 

Table 2: Summary of Reserves

as at 30(th) June 2019

(a) Oil

 
    Status                 Gross Field                  Net Economic Entitlement 
                             (MMBbl)                             (MMBbl) 
 
                Proved     Proved       Proved+     Proved     Proved       Proved+ 
                          + Probable    Probable+             + Probable    Probable+ 
                                        Possible                            Possible 
               -------  ------------  -----------  -------  ------------  ----------- 
 Developed       3.09       6.56          8.80       0.30       0.63          0.85 
               -------  ------------  -----------  -------  ------------  ----------- 
 Undeveloped     0.52       3.99          7.13       0.05       0.38          0.62 
               -------  ------------  -----------  -------  ------------  ----------- 
 Total           3.61       10.56        15.93       0.34       1.00          1.47 
               -------  ------------  -----------  -------  ------------  ----------- 
 

(b) Gas

 
    Status                 Gross Field                  Net Economic Entitlement 
                             (MMBbl)                             (MMBbl) 
                Proved     Proved       Proved+     Proved     Proved       Proved+ 
                          + Probable    Probable+             + Probable    Probable+ 
                                        Possible                            Possible 
               -------  ------------  -----------  -------  ------------  ----------- 
 Developed       3.6         7.1          12.2       0.3         0.7          1.2 
               -------  ------------  -----------  -------  ------------  ----------- 
 Undeveloped     0.0         0.7          2.3        0.0         0.1          0.2 
               -------  ------------  -----------  -------  ------------  ----------- 
 Total           3.6         7.8          14.5       0.3         0.7          1.4 
               -------  ------------  -----------  -------  ------------  ----------- 
 

Notes:

1. Gross Field Reserves are 100 percent. of the volumes estimated to be commercially recoverable from the asset under the intended development plan.

2. Net Reserves are the net economic entitlement attributable to the interest to be acquired by UOG under the terms of the PSC that governs this asset.

3. For all of the Reserves volumes, the Operator is the East Abu Sennan Petroleum Company.

   4.             Totals may not exactly equal the sum of the individual entries due to rounding. 

(Source: GCA CPR Executive Summary, Reserves Summary)

Rockhopper Egypt reported turnover and gross profit for the audited year ended 31 December 2018 of US$6,123,788 and US$2,393,509 and for the unaudited six month period to 30 June 2019, US$ 3,184,310 and US$1,203,073 respectively.

The unaudited pro forma net assets of UOG prepared to illustrate the effect of the Acquisition together with the Placing and Subscription, as if they had taken place as at 31 December 2018, are US$20,782,765.

Notice of General Meeting

The Admission Document convening a General Meeting of the Company to be held at 10.00 a.m. (UK time) on 23 December 2019 at 200 Strand, London WC2R 1DJ was posted to Shareholders on Friday, 6(th) December 2019. At that meeting, a resolution will be proposed in order to seek shareholder approval for the Rockhopper Acquisition as required by the AIM Rules. In addition, resolutions will be proposed at the General Meeting to grant powers of allotment and disapplication of statutory pre-emption rights in respect of, inter alia, the Placing Shares, Subscription Shares and Consideration Shares.

Defined terms used in this announcement have the meanings ascribed to them in the Admission Document.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

For further information please visit the Company's website at www.uogplc.com or contact:

 
 United Oil & Gas Plc (Company) 
 Brian Larkin, CEO                       [e-mail] 
 Beaumont Cornish Limited (Nominated 
  Adviser) 
 Roland Cornish and Felicity Geidt       [phone] 
 Optiva Securities Limited (Joint 
  Broker) 
 Christian Dennis                        [phone] 
 Cenkos Securities Plc (Joint Broker) 
 Joe Nally (Corporate Broking)            [phone] 
  Derrick Lee and Pete Lynch               [phone] 
 Murray (PR Advisor)                     [phone] 
 Joe Heron                               [e-mail] 
 
 St Brides Partners (Financial PR/IR) 
 Frank Buhagiar and Priit Piip           [phone] 
 

Appendix I

Extracts from the Admission Document

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 
 Resumption of trading in the Existing         on or around 9 December 
  Ordinary Shares on AIM                                          2019 
 Latest time for return of the Form          10.00 a.m. on 19 December 
  of Proxy                                                        2019 
 General Meeting                             10.00 a.m. on 23 December 
                                                                  2019 
 Completion of the Rockhopper Acquisition        on or about 6 January 
                                                                  2020 
 Admission to trading effective and              on or about 6 January 
  Commencement of dealings in the Enlarged                        2020 
  Ordinary Share Capital on AIM 
 

Note: All references to time in the Document are to London time unless otherwise stated and each of the times and dates are indicative only and may be subject to change (based on the Company's current expectations). If any of the above times or dates should change, the revised times and/or dates will be notified to Shareholders by an announcement on a Regulatory Information Service.

PLACING, SUBSCRIPTION AND ROCKHOPPER ACQUISITION STATISTICS

 
 Number of Existing Ordinary Shares 
  as at the date of the Document                            345,613,985 
 Number of Warrants in issue as at 
  the date of the Document                                   82,212,206 
 Number of Options in issue as at the 
  date of the Document                                       11,117,648 
 Placing Price per Ordinary Share                               3 pence 
 Number of Placing Shares to be issued 
  pursuant to the Placing                                   150,616,669 
 Subscription Price per Ordinary Share                          3 pence 
 Number of Subscription Shares to be 
  issued pursuant to the Subscription                         8,419,498 
 Number of Consideration Shares                             114,503,817 
 Enlarged Ordinary Share Capital on 
  Admission                                                 619,153,969 
 Percentage of Enlarged Ordinary Share                    25.7 percent. 
  Capital on Admission represented by 
  the Placing Shares and the Subscription 
  Shares 
 Consideration Shares as a percentage                     18.5 percent. 
  of the Enlarged Ordinary Share Capital 
 Market capitalisation of the Company                   GBP18.6 million 
  at the Placing Price on Admission 
 Gross proceeds of the Placing and                       GBP4.8 million 
  the Subscription 
 Proceeds of the Placing (net of expenses)               GBP4.3 million 
 ISIN                                                      GB00BYX0MB92 
 SEDOL                                                          BYX0MB9 
 LEI                                          213800WZWERBFYBQ9J17Q9J17 
 TIDM                                                               UOG 
 

Note: Figures are calculated based on USD:GBP exchange rate of GBP1:$1.31 as at 4 December 2019

Forward looking statements Advisory

Certain statements in this announcement are or may constitute forward looking statements, including statements about current beliefs and expectations of the Directors. In particular, the words "expect", "anticipate", "estimate", "may", "should", "plan", "intend", "will", "would", "could", "target", "believe" and similar expressions (or in each case their negative and other variations or comparable terminology) can be used to identify forward looking statements. Such forward looking statements are based on the Board's expectations of external conditions and events, current business strategy, plans and the other objectives of management for future operations, and estimates and projections of the Group's financial performance. Though the Board believes these expectations to be reasonable at the date of the Document they may prove to be erroneous. Forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, achievements or performance of the Group, or the industry in which the Group operates, to be materially different from any future results, achievements or performance expressed or implied by such forward looking statements. These risks and factors include, but are not limited to, risks relating to the Company's ability to execute its exploration and development programme, drilling and operating risks, dependence on key personnel, compliance with environmental regulations and competition. Any forward looking statement in this announcement speaks only as of the date it is made. Forward looking statements and other information contained herein concerning the oil and natural gas industry in the countries in which the Company operates and the Company's general expectations concerning this industry are based on estimates prepared by the Company's management using data from publicly available industry sources as well as from resource reports, market research and industry analysis and on assumptions based on data and knowledge of this industry which the Company believes to be reasonable. However, this data is inherently imprecise, although generally indicative of relative market positions, market shares and performance characteristics. While the Company is not aware of any material misstatements regarding any industry data presented herein, the oil and natural gas industry involves numerous risks and uncertainties and is subject to change based on various factors. Actual results, performance or achievement could differ materially from that expressed in or implied by any forward looking statements or information in this announcement, and accordingly, investors should not place undue reliance on any such forward looking statements or information. Further, any forward looking statement or information speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward looking statements or information to reflect information, events, results, circumstances or otherwise after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by law including securities laws and/or the AIM Rules for Companies. All forward looking statements and information contained in this announcement and other documents of the Company are qualified by such cautionary statements. New factors emerge from time to time, and it is not possible for the Company's management to predict all of such factors and to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward looking statements.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

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December 09, 2019 02:00 ET (07:00 GMT)