The boss of Rockrose Energy has said he’s “hopeful” about the firm’s takeover plans for Independent Oil and Gas (IOG), despite an initial rejection.
Yesterday RockRose announced it was turned down by Independent Oil and Gas’ board when it made a formal approach worth £26.6m.
IOG said the pre-condition offer was “opportunistic and materially undervalues” the firm and also said that some of RockRose’s statements were “misleading”.
It comes just a week after RockRose secured a £107m deal to buy Marathon Oil’s North Sea business.
Executive chairman Andrew Austin said he didn’t expect another acquisition opportunity to come so soon, and hopes they can reach a positive conclusion.
“Obviously we hope to be successful but we’re not going to acquire these at just any price”, he said.
“There are others in the North Sea with similar asset packages which would be attractive additions for RockRose.
“This is a fair offer and we would seek to engage with them towards a conclusion.”
IOG recently reported “serious interest” in its search for partners for its Southern North Sea assets and the board rejected RockRose’s bid in order to continue this pursuit.
Its flagship “core” project includes the Vulcan and Blythe gas hubs, expected to able to produce 300 billion cubic feet of gas, and its Harvey discovery.
IOG said it would be “challenging” for IOG to raise the estimated £450m needed to develop the assets without a partner, and its “compelling offer” means it would remove risk for shareholders.
RockRose also highlighted “question marks” over IOG’s finances as the firm has borrowed £15m from London Oil and Gas, who in turn are financed by London Capital and Finance, which is in administration.
Mr Austin said that’s why they wanted to buy, rather than partner with, the business.
He added: “The ultimate provider of the finance that exists on the balance sheet at the moment is in administration and subject to an FCA enquiry.
“The assets that are IOG we think are really good SNS gas basin assets that are drill-ready development projects and the IOG team should be commended for collecting that.
“However, we saw some question marks around their position, which made it a more compelling arrangement for RockRose to acquire the company rather than partner in the assets.
“We thought that would be welcomed by the board but that doesn’t take us away from the quality of the assets.”
RockRose will take on Marathon’s operating base in Aberdeen once that deal is finished later this year, with staff transferring over.
Even though this latest opportunity came sooner than expected, Mr Austin said there is still potential for even more acquisitions.
He said: “We are always looking at things, but for the moment we would like to digest the acquisition of Marathon and hopefully the acquisition of IOG that we are producing more than 24,000 barrels per day.
“Let’s take one step, or maybe two steps, at a time.”