Deltic Energy PLC (AIM:DELT) shares rose more than a third in value on the news that it is to be acquired by Rockrose Energy in a cash deal.
The 7.46p per share deal is pitched at a 36% premium to Friday’s closing price, and values Detic at £6.9 million.
Viaro Energy, the parent company of Rockrose, will provide a £2.7 million bridge loan to cover Deltic’s working capital needs whilst the transaction is completed.
It provides the wherewithal for the continuing participation in Deltic’s North Sea exploration and appraisal projects, where it is partnered with Shell.
In the past, Deltic was forced to exit the Pensacola discovery after failing to secure funding, and, more recently, it enjoyed success in the Selene project, to again raises the challenge of financing its participation in the Shell-led project.
Deltic owns 25% of the gas project, which is expected to advance to a ‘final investigation decision' by early 2027, to enable a field start-up in 2029.
Viaro, a privately owned UK-focused upstream company, acquired RockRose for just shy of £250 million in 2020, and since taking the vehicle into private hands, has continued to expand via the negotiating table.
In July last year, RockRose acquired a package of North Sea projects from a Shell-Exxon vehicle, taking up the Clipper, Leman, Galleon, as well as the Bacton gas terminal onshore. Before that, in 2023, it acquired a stake in the Bressay oil field.
Currently, the business handles around 9% of the UK’s daily gas production.
Viaro chief executive Francesco Mazzagatti described the Deltic assets as a natural fit.
“The Selene discovery is a key driver for this acquisition, which forms an important component of Viaro's recently announced transaction with Shell and ExxonMobil, as well as within the broader basin context,” Mazzagatti said.
“By working with joint venture partners to overcome the economic challenges imposed by the current fiscal uncertainty, we aim to ensure that important developments like Selene can be successfully progressed towards production in a timely manner, and with the right level of technical and financial support."
Andre Nunn, Deltic’s chief executive, meanwhile, commented: "Despite the difficult political and fiscal backdrop impacting the UK E&P industry over a number of years, the achievements of the Deltic team and the quality of our assets have been recognised by Viaro.
“This transaction provides certainty for shareholders as well as our staff, regulators and joint venture partners who are progressing the Selene opportunity towards development for the benefit of the UK's future energy needs.”
Deltic’s board has unanimously recommended the takeover offer, whilst also raising concerns about the small-cap’s prospects if the deal were not to proceed.
Moreover, Deltic flagged that Shell recently informed the company of a currently unquantified “overspend” on the Selene well, which is adding a current estimate of around £1.3 million in net costs to Deltic.
So far, irrevocable undertakings in favour of the proposed transaction represent some 19.17% of Deltic’s shares.
A general meeting will in due course be called to vote on the deal, which is slated to complete in the fourth quarter of 2025.
In London, Deltic shares were up 36% to 7.5p.