RockRose Eyes UK Takeover

UK minnow RockRose made a formal, cash-only takeover approach to compatriot Independent Oil  & Gas (IOG) March 1 which was rejected. Rockrose is continuing with its attempt to buy it out, it said March 5. IOG is the 100% owner of five southern basin gas fields, with total proven plus probable reserves of 303bn ft³.

The offer valued IOG at £26.6mn ($35mn), a premium of 51% to the closing price on February 26, the day of RockRoses's initial approach. IOG said it would prefer to continue to look for a strategic partner.

One of IOG's ultimate sources of funds is London Capital & Finance, by way of London Oil & Gas Group. LCF has been in administration since late January.

RockRose said its offer would allow shareholders to profit immediately from a significant premium to the market price and warned of other financing agreements that could greatly reduce IOG shareholders' asset value if they held on to their shares. Another possible problem would be a protracted and perhaps unsuccessful effort to find a partner, since funding the £450mn field development alone would be difficult. Success might mean losing operatorship, and so control over the timetable.

RockRose said the assets would be unlikely to generate revenue for at least three years from any farm-out, and until that point the market would not allocate value to the assets.

RockRose concluded it was "the fiduciary duty of the IOG Board to engage with RockRose immediately including providing it with access to the convertible loan documents and other documents representing other dilutive securities while the board considers, in conjunction with its advisers, the merits of the potential offer."

RockRose's own shares are suspended as it is buying Marathon's UK oil and gas assets in a reverse takeover.