Hague and London Oil PLC has agreed the conditional acquisition of significant non-operated natural gas production assets in the Dutch North Sea from Tullow Netherlands Holding Cooperatief B.A. based on an enterprise value of €4,752,675, the net effect of which is that the Seller shall receive an estimated amount of €9,752,429 on Completion and contingent payments of up to €20,000,000 payable between 1 January 2019 and 1 January 2021.
HALO is to acquire the assets through the purchase by its wholly owned subsidiary, Hague and London Oil B.V. (HALO B.V.), of the entire issued share capital of Tullow 101 Netherlands B.V. (Tullow 101) (the "Acquisition").
- HALO B.V. will acquire Tullow 101 and its two subsidiaries, Tullow Exploration & Production B.V. and Tullow Exploration & Production Netherlands B.V. (the "Target Group").
- The Acquisition comprises interests in a suite of offshore exploration and production licences on the Dutch Continental Shelf (DCS) within the Northern Area and Joint Development Area (JDA) in the western part of the DCS (the Licences), which collectively generated total net production of 2,900 boepd in 2016.
- The Directors believe that the Acquisition represents a transformational step in the implementation of HALO's strategic repositioning towards lower risk, production opportunities in established hydrocarbon provinces with ample access to, and equity ownership of, infrastructure.
- The Licences benefit from stable field production and the Directors see potential for significant upside in proved undeveloped and probable reserves, and contingent resources.
- HALO is currently engaged in discussions with potential finance providers to agree the terms of funding for the completion payment pursuant to the terms of the Acquisition, whilst minimising dilution to Shareholders. The Company will announce further details of its financing arrangements at the appropriate time and once any binding agreement is entered into and details of such arrangements shall be included in the Admission Document.
Andrew Cochran, Chairman and Interim Chief Executive of Hague and London Oil plc, commented:
"Since the combination with Wessex Exploration in 2014, we have been on a slow but steady, measured, path to transform the Company into a lower-risk, successful E&P player. The prolonged market downturn has hit our sector very hard and has certainly impacted our efforts to diversify and grow the portfolio sooner. We have therefore been focused, disciplined and persistent in our implementation of the announced strategy, and today's proposed acquisition is the culmination of the Company's dedication to deliver within the stated objectives and a cost-effective manner. These are high-quality, cash generative assets with significant upside potential, in a mature basin with existing infrastructure and commercialisation routes - which have been the critical factors in our screening process and are also likely to be key in agreeing the funding of the Acquisition. We are looking forward to integrating this portfolio into HALO to continue on the future growth trajectory. This will fully complete the corporate transition to what we had longed planned for the Company"
Reverse takeover, General Meeting and Admission
Given the scale of the Acquisition when compared to the existing Group, the Acquisition constitutes a reverse takeover under Rule 14 of the AIM Rules and requires the Company to issue a new admission document and is conditional, inter alia, on the approval of the Acquisition by Shareholders. The Company is in the process of preparing an admission document relating to the Acquisition and readmission to trading on AIM of the Enlarged Group (the "Admission Document") and is aiming to publish the Admission Document by 1 August 2017. A Competent Person's Report ("CPR") on the material assets and liabilities of the Enlarged Group is in the course of being finalised, and will be included in the Admission Document as required by the AIM Rules. The Admission Document and a notice of the General Meeting, at which the approval of HALO's shareholders to the Acquisition will be sought, will be sent to shareholders in due course following the finalisation of the CPR and binding financing agreements.
Stifel Nicolaus Europe Limited is acting as nominated advisor to the Company in connection with the Acquisition.