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Oil and gas news summary: Ophir Energy, Dominion Petroleum, Rockhopper Exploration, Desire Petroleum, Argos Resources, BowLeven


The top stories of the week in the oil and gas sector were Ophir Energy’s (LON:OPHR) acquisition of East Africa focused small cap Dominion Petroleum (LON:DPL) and a farm-in deal between Rockhopper Exploration (LON:RKH) and Desire Petroleum (LON:DES), which both operate in the Falklands.

On Thursday, FTSE 250 constituent Ophir Energy unveiled an agreed £118.2 million deal to acquire Dominion Petroleum.

The enlarged group will hold the largest independent net deepwater acreage portfolio in the emerging and highly prospective hydrocarbon province of East Africa.

“The exposure to Ophir's existing discoveries in Tanzania would de-risk the combined portfolio while maintaining significant upside exposure for both companies' shareholders,” said Dominion chairman Roger Cagle. 

Investors will receive 0.02244 Ophir shares for every Dominion share they currently own, while convertible note holders will receive £21 million (US$32.8 million).

The offer represents a 64 per cent premium to the Dominion share price at the close of trade on Wednesday, and is the second major bid in the space of a week in the mid-cap E&P sector.

Shares in the North Sea drillers and developers shot up after Premier Oil (LON:PMO) agreed the £221 million takeover EnCore Oil (LON:EO.) last Wednesday.

On Wednesday, Rockhopper Exploration struck a deal with Desire Petroleum to acquire some of its acreage in the Falklands.

Through the deal Rockhopper will gain a stake in additional exploration acreage and in return it will cover the costs of a new exploration well. This is likely to be a major boon for Desire’s prospects as it currently has insufficient funds to drill any more wells itself, following an unsuccessful campaign.

Additionally Rockhopper has also revealed that it will seek new funds from investors with the placing of 25.8 million new shares, around 10 per cent of the current issued share capital. The placing is being run by Canaccord Genuity and Merrill Lynch International and the placing price will be confirmed on closing.

Another explorer operating in the Falkland Islands, Argos Resources (LON:ARG), said on Friday that the findings of an independent competent persons report on its acreage in the Falklands confirmed six structural prospects, which were previously mapped in 2D seismic, and identified 22 new ones.

Importantly the CPR defines a new prospective resource for the company’s acreage with ‘best’ estimates of 2.1 billion barrels of oil.

This represents a 182 per cent increase from the previous estimate of 747 barrels of oil.

The ‘high’ estimate sees 7.3 billion barrels of oil on the licence.

In other news, UK listed supermajor BP (LON:BP.) this week demonstrated its commitment to the British north sea oil industry as it announced a five year development programme in which it will invest nearly £10 billion.

The firm said that this investment will help to maintain BP's production from the North Sea for decades to come.

BP and its partners - Shell, ConocoPhillips and Chevron – now has the green light from the government for the Clair Ridge project, which is the second phase of the giant Clair field development near the Shetland Islands.

Moving back to small caps, BowLeven (LON:BLVN) saw its share price add nearly 50 percent on Friday after its Sapele-3 well on the Etinde permit offshore Cameroon discovered oil and gas condensate.

Importantly, the well has shown that the Deep Omicron interval extends considerably beyond the currently mapped area, which BowLeven says has significant implications for the prospectivity potential of both block MLHP-5 and MLHP-6.

The Sapele-3 well has encountered 11 metres of log evaluated hydrocarbon pay in high quality sandstone reservoirs within the same interval intersected by previous Sapele wells.

Elsewhere in the sector, US-focused oil firm Nighthawk Energy (LON:HAWK, OTCQX:NHEGY) said it plans to push ahead with the first steps in a new work programme for its Jolly Ranch project in Colorado after it was unable to proceed with the acquisition of the 50-per cent stake in the asset that it does not already own.

In connection with the work programme, the firm plans a placing and open offer to shareholders in order to raise up to €5 million.

The firm said this week that it had been in discussions with institutional investors in order to raise funds so that it can acquire the 50-per cent stake from its partner Running Foxes Petroleum.

Investor feedback had been “largely positive” but the current overall market conditions mean that the acquisition cannot be executed.

Peer Coastal Energy (LON:CEO, CVE:CEN) unveiled the results of another successful well on the Bua Ban field off the coast Thailand.

The Bua Ban North A-08 appraisal well was drilled to a depth of 3,860 feet and uncovered 61 feet of net pay oil in the Lower Miocene sand.

It also confirmed that Bua Ban North A shares a common oil-water contact point on its western flank with the neighbouring Bua Ban North B field.

The combined area of the fields is thought to be 1,700 acres – in line with previous estimates.

Meanwhile, independent African oil firm SacOil (LON:SAC) this week announced that it has secured a US$25 million equity credit line funding facility with Yorkville Advisers.

Through the facility, referred to as a Standby Equity Distribution Agreement (SEDA), Yorkville will make US$25 million of new capital available to SacOil over a three year period. When the firm requires funds it can make a ‘draw down’ on the SEDA and in return new shares will be issued to Yorkville.

Another funding update came from Tower Resources PLC (LON:TRP), which  said Northland Capital Partners Ltd has raised US$4 million, or £2.59 million, before expenses through a placing with institutional and other investors of 103.7 million new shares at a price 2.5 pence each.

The oil and gas exploration company with assets in Uganda and offshore Namibia said the placing is in line with comments it made with its interim results statement at the end of September to issue only the smallest amount of equity for the time being, consistent with working capital requirements, while the Uganda farm-out process continues.

This week's appointments included the hiring of experienced City operator Stephen Matthew Clarke as a non executive director by Mediterranean Oil & Gas (LON:MOG).

Clarke, who is currently a partner of corporate broker Merlin Partners LLP, has has over 20 years of experience in the financial markets as a corporate lawyer and as a banker.

MOG highlighted that Clarke was instrumental in the £30 million refinancing – through the issue of shares and the conversion of debt into equity – in May this year.

A couple of other small cap oil and gas companies, Sound Oil (LON:SOU) and Europa Oil & Gas (LON:EOG), released operational updates this week.

Sound Oil
told investors that drilling is expected to start at the Cataka-1 well on the Citarum production sharing contract (PSC) in Indonesia in the coming weeks.

The firm released details of an operations update from Pan Orient Energy Corp, which is the operator of the production sharing contract on the island of Java.

Sound Oil has a 20 per cent interest in the PSC.

Site construction is currently underway for the Cataka-1 well and is expected to be completed in mid-November. The well is the first of a three-well back-to-back exploration programme, the firm said.

Europa Oil & Gas has spudded the Horodnic-1 well to evaluate the Voitinel gas discovery in Romania, looking to prove up the minimum gas volume for commercial development.

The Horodnic-1 well follows-up the Voitinel-1 discovery well, which flowed 3 million cubic feet per day in 2009.

If successful, Horodnic-1, which is the second well on the Voitinel discovery, will be followed by a further well to test the potential of the Voitinel-Solca trend on the licence, which EOG believes may contain significant gas reserves.

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