Roc Oil Co. Ltd. and Horizon Oil Ltd., both of Sydney, have proposed a merger to create a significant Asian exploration and production company.
Calling it an all-scrip merger of equals, the two companies announced they have entered into a merger implementation deed whereby they will merge via a Horizon scheme of arrangement.
Horizon shareholders will receive 0.724 Roc share for each Horizon share held. The figure is based on the exchange ratio implied by the 10-day VWAP of Horizon and Roc shares ending on Apr. 24—the last day of trading prior to the announcement.
Following completion of the merger Roc shareholders will own about 42% of the merged entity while Horizon shareholders will have 58%.
The merger proposal has support of both Roc and Horizon boards.
When implemented, the merger will create a company of significant value with potential for substantial growth. It will have a market capitalization of $800 million (Aus.), net 2P reserves of 36.9 million bbl of oil equivalent (95% liquids) and net 2C contingent resources of 120.7 million boe.
The combined portfolios include assets across China, Papua New Guinea, Malaysia, Myanmar, Australia, and New Zealand along with a strong cash flow and numerous growth options through appraisal and exploration prospects.
Current Horizon Chief Executive Officer Bent Emmet will become chief executive officer and managing director of the merged entity.
The senior management team will be drawn from the two companies’ existing teams. Mike Harding, current Roc chairman, will chair the new entity. Horizon Chairman Fraser Ainsworth, meanwhile, will be appointed a nonexecutive director of the new group.
The timetable for implementation of the merger begins with the first court hearing to approve the scheme booklet in June followed by circulation of the booklet to Horizon shareholders later the same month. A scheme meeting of Horizon shareholders will take place in late July followed by a second court hearing to approve the scheme in August. Merger implementation is expected to take place by the end of August.