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Oilman Jim's Private Blog


Deltic Energy - Statement re. Proposal from Reabold Resources

The Board of Deltic Energy Plc (AIM: DELT), notes the announcement yesterday by Reabold Resources plc ("Reabold") regarding a potential all share offer to be made by Reabold for the issued and to be issued share capital of Deltic Energy (the "Proposed Offer"). The Board confirms that it received an unsolicited and non-binding approach letter from Reabold on 14 July 2020, which it unequivocally rejected on 15 July 2020.

After consideration of the Proposed Offer with its advisers, the Board of Deltic Energy rejected the Proposed Offer for the following reasons:

Value of the Proposed Offer

The Proposed Offer does not place an appropriate value on Deltic Energy, given that it places no value at all on its significant non cash assets, not least its share of two potential high impact exploration wells with their partner Shell and does not even reflect the existing cash balance of Deltic Energy.

Strategic rationale

The Board of Deltic Energy does not believe there to be a strong rationale, commercial logic or sufficient operational synergies that would justify a combination of the two businesses.

Reabold's portfolio of investments

The Proposed Offer does not reflect the commercial and technical risks associated with the Reabold portfolio that Deltic shareholders would be exposed to in the event of a combination of the two businesses.  The Board of Deltic Energy has a detailed understanding of a number of Reabold's investments, in particular, the West Newton project, which gives us serious concerns in relation to the technical viability, materiality and limited potential upside associated with various of these projects.

Unlike many of its competitors, Deltic Energy is fully funded to deliver on its existing strategy, including for its share of two potential high impact exploration wells, which Shell farmed into following an extensive period of technical and commercial due diligence, as well as its working capital requirements through to mid-2022.

This announcement is not, and should not be construed as being, an announcement of a firm intention by Reabold to make an offer for Deltic Energy under Rule 2.7 of the Takeover Code and was made without the consent of Reabold.

In accordance with Rule 2.6(a) of the Takeover Code, Reabold is required to announce either a firm intention to make an offer for Deltic Energy (pursuant to Rule 2.7 of the Takeover Code) or that it does not intend to make an offer (in which case the announcement will be treated as a statement to which Rule 2.8 of the Takeover Code applies) by 5:00pm on 12 August 2020 (being the 28th day following the date of Reabold's announcement), unless the Panel on Takeovers and Mergers (the "Takeover Panel") has consented to an extension of this deadline in accordance with Rule 2.6(c) of the Takeover Code.

There can be no certainty that Reabold's proposal will result in an offer being made for the Company, nor as to the terms on which any such offer may be made.

Following the announcement made by Reabold, the Company is now considered to be in an "offer period" as defined in the Takeover Code, and the dealing disclosure requirements listed below will apply.

Allenby Capital Limited is acting as financial adviser to the Company in relation to the Takeover Code.

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