Iranian gold and copper explorer Persian Gold (LON:PNG) is to acquire the outstanding shares of Hydrocarbon Exploration via a scheme of arrangement. HyEx was formed to hold the non-Colombian and non-Peruvian assets of Pan Andean Resources which were not acquired by Canadian oil group Petrominerales (TSX:PMG) following a takeover earlier this year. At the current Persian share price of 6.75p, the offer values HyEx at around £4.3m.
As part of the earlier deal, Petrominerales acquired Pan Andean’s assets in Colombia and Peru in a deal worth £18m. At the time, John Teeling, the Irish entrepreneur who founded both Pan Andean and Persian Gold, said the move would unlock value in for Pan Andean’s shareholders while retaining assets in Bolivia and the US. He said HyEx would look for a stock market listing in due course.
Today, Mr Teeling said: "This is a good proposal for both companies and I strongly support it. HyEx gets a stock exchange listing which gives liquidity to its shareholders and Persian Gold expands its oil and gas portfolio. The increased scale will make the combined venture more acceptable to investors."
Persian has conditionally offered to buy all the outstanding shares of HyEx from the existing shareholders on the basis of 2,500 new shares of Persian for every one HyEx share held. This would result in HyEx shareholders holding about 45.75% of the enlarged Persian. It is expected that Persian will undertake a placing to raise working capital for the enlarged group. It will also change its name to Clontarf Energy. The acquisition constitutes a reverse takeover of Persian under AIM rules. Persian has requested suspension of its shares from AIM pending publication of an admission document.
In the US, HyEx receives income from its royalty interests in Block High Island 52 and 63% working interest in Block High Island 30L in the Gulf of Mexico and small royalties from onshore holdings. Oil production from all of these assets is declining and is expected to be negligible within two years. There is a claim against HyEx for circa $4 million from Hunt Oil, who operate High Island 30, which is disputed.
HyEx also has a 10% stake in the El Dorado gas field in Bolivia. El Dorado is a well located gas field with reserves of over 1 trillion cubic feet. It was a BP/Pan Andean joint venture. The BP stake is…
