Italy-focused independent exploration and production firm Sound Oil is planning to launch a takeover of fellow independent Antrim Energy by making an offer for all Antrim's listed shares.
The move, which values Calgary-headquartered Antrim's issued share capital at £6.35, follows Africa-focused Ophir Energy's bid for southeast-Asia exploration and production firm Samalander Energy, the terms of which were agreed by the boards of both firms today (24 November), as junior market-listed firms look to consolidate or takeover other undervalued players.
According to Sound Oil, its move to acquire Antrim is part of its strategy to build a pan-European oil and gas business, adding Antrim's UK North Sea and offshore Ireland acreage to its Italy-focused portfolio.
Sound Oil also says Antrim, which solds its producing interests in the Causeway and Cormorant fields earlier this year for $53 million, now has ongoing costs which "represent a disproportionate and unsustainable share of Antrim's market capitalization, reduced appeal and credibility as a standalone investment proposition and as a partner to other oil and gas companies."
The two firms would have a pro forma cash balance of about £23 million and could save cash by closing Antrim Energy's Calgary office, Sound Oil added.
Antrim's assets now include 25% interest in the offshore Ireland, Porcupine basin, Skellig block, operated by Kosmos and on which exploration drilling is due to start in 2016. According to Antrim, Skellig has some 17 exploration leads.
It also holds 100% in the North Sea Fyne discovery, over which it is in discussion with the Department of Energy and Climate change over possible development options, after missing an August deadline to submit a field development plan using buoy technology. Antrim also holds 50% in the North Sea Erne license.
Sound Oil's existing exploration portfolio is mostly onshore Italy, including the Badile and Zibido prospects in Italy. Drilling on Badile is due to start in 2015.
Sound Oil had made an "indicative proposal" to Antrim at the end of October. James Parsons, Sound Oil's Chief Executive Officer, says: "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 program, which includes the drilling of the Badile prospect 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."
As well as drilling on Badile and Nervesa, Sound Oil has additional drilling due at Laura and Santa Maria Goretti in the near term, all onshore. Furthermore, the company has recently brought a second onshore producing asset on-stream at Casa Tiberi, in addition to the existing Rapagnano production.
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