Trapoil to take on Jog in reverse deal

Junior exploration firm Trapoil has agreed to acquire Jersey Oil and Gas E&P (JOG) for £495,000 and raise about £820,000 to cover its costs. 

In a reverse takeover style deal, Trapoil will be renamed Jersey Oil and Gas and JOG's founding shareholders and directors Andrew Benitz and Ronald Lansdell will be appointed to the company's CEO and COO respectively.

The move follows Trapoil's warning earlier this year that it could be facing insolvency without additional funding. 

The firm said its new strategy would be to continue to focus on maintaining, developing and exploiting a portfolio of North Sea assets with a greater focus on producing assets in order to seek to unlock the inherent value in the group's existing tax losses;

To assess and acquire potential further North Sea oil and/or gas producing assets, some of which have already been identified by Jersey Oil and Gas and are currently undergoing due diligence and/or subject to ongoing commercial negotiations.

The deal is subject to shareholder approval. 

Marcus Stanton, Non-Executive Chairman of Trapoil, commented: "We believe that the proposed acquisition of JOG, refined business strategy and injection of new capital, presents a welcome opportunity to enable the company to resume a growth strategy going forward and benefit from JOG's experienced management team, in order to maximize shareholder returns in the medium and longer term. These proposals are therefore strongly recommended by the board."

Andrew Benitz, CEO of JOG, said: "Following the recent settlement agreement with its major creditors, there is considerable value potential within the group with respect to its existing tax losses, its current asset portfolio - including the carry to first oil on Magnolia and the high working interest in the Romeo discovery - together with its remaining cash reserves. 

"We believe that the enlarged group will be well placed to take advantage of the evolving consolidation opportunity in the North Sea, as may be demonstrated by the billions of dollars of private equity capital raised to pursue projects in the North Sea in recent months."