Market Report: Rockhopper buys rival Falkland Oil & Gas in £57.1 million deal

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With oil prices sinking again, it was only a matter of time before the industry’s next takeover.

Rockhopper Exploration, 0.5p cheaper at 35.25p, is buying smaller rival Falkland Oil & Gas, up 0.3p at 9.9p, in an all-share deal worth £57.1 million.

Investors would have preferred a cash offer after 50% share-price slumps from the pair this year, which explains why the FOGL price is still some way below the 10.7p bid value.

Only yesterday, the pair began drilling a well off the Falkland Islands, operated by FTSE 250 firm Premier Oil, down 0.55p at 74.1p today.

Marc Anis-Hanna, at natural-resources broker VSA Capital, argues the deal will bolster FOGL’s balance sheet from its current cash position of just $8.6 million (£5.6 million) to a much-sturdier $130 million, while Rockhopper’s oil resources almost double to around 250 million barrels of oil equivalent.


Sworn in: Mauricio Macri (Picture: EPA)

The deal comes as Argentina, whose bitter feud with the UK over the Falklands spans decades, swore in new president Mauricio Macri — a leader who has said he will adopt a less-confrontational stance to foreign investment than taken by former head of state Christina Fernández de Kirchner, who controversially nationalised YPF, owned by Spanish oil giant Repsol, in 2012.

But Macri’s arrival provided little support for London-listed, Argentina-focused firms, with oil firms Andes Energia down 0.63p to 25.13p and President Energy 0.16p off at 7.52p.

Investors backed out of Patagonia Gold, 0.13p worse off at 1.5p, after it cut the annual production forecast at its Lomada mine in Argentina to just 21,542 ounces and warned cash costs this year averaged almost $1300 an ounce — more than $200 above the current spot price. 

The FTSE 100 remained in the red, down 48.24 at 6257.25, with travel shares again the worst hit.

Education publisher Pearson dropped 23.76p to 792.74p as Berenberg pegged back its target price further to 730p with the dividend under increasing threat.

Babcock was the top blue-chip riser, up 36p to 1041p, as the engineering support-services group lifted its interim dividend by 10% following a strong, first-half performance.

UAE private healthcare group NMC, still hoping for a tie-up with Al Noor Hospitals, paid $189 million for a 51% stake in in-vitro fertilisation specialist Fakih IVF Group and jumped 19.5p  to 783p. 

Elsewhere, catering heavyweight Compass ticked up 2p to 1079p after annual revenues and profits rose, while Irish convenience-food firm Greencore dipped 4.7p to 315.5p despite a similar full-year performance.

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November 24, 2015 |
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