RockHopper buys Egypt's Beach Petroleum for $11.9m

16th Aug 2016 09:41

(ShareCast News) - Oil and gas explorer RockHopper Exploration bought Egypt's Beach Petroleum for $11.9m to increase its "exposure to low cost, cash generative production assets" in the region.The acquisition was funded by the company's existing cash resources with Beach Energy retaining the economic benefit of the lion's share of the Egyptian General Petroleum Corporation (EGPC) receivables balance of $10.1m as of 15 August 2016.Of that amount, $2.7m would be for the benefit of RockHopper.In terms of barrels of oil equivalent Rockhopper paid a transaction multiple of $2.7 per barrel.Beach Petroleum, which on average churns out about 1,100 barrels of oil per day, holds a 22% interest in the Abu Sennan concession in the Abu Gharadig basin in the Western Desert, and a 25% interest in the El Qa'a Plain concession on the eastern shore of the Gulf of Suez.Al Jahraa SE-1X oil exploration well, part of the Abu Sennan license, was expected to be brought into production immediately and would add about 2m barrels of oil to the estimate of recoverable reserves from the concession.The acquisition, when combined with existing production in Italy, was expected to raise Rockhopper's production to between 1,500 and 1,800 barrels of oil per day during the remainder of 2016.Chief executive Sam Moody, said: "We are delighted to announce the completion of this strategically important acquisition which materially increases our exposure to low cost, cash generative production assets. Unit cash operating costs at Abu Sennan during H1 2016 were approximately $8 per barrel. With the recent exploration success at the Al Jahraa SE-1X well, combined with the increase in estimated 2P reserves, we are delighted to be retaining the entire 22% interest in Abu Sennan."In the Falklands, good progress continues to be made in capturing costs savings and reducing the project break-even oil price. We expect to see front-end engineering design activity ramp-up through the remainder of 2016.Following the completion of the acquisition, Rockhopper's 2016 year-end cash guidance was unchanged at between $60m to $70m.Shares in AIM-listed RockHopper Exploration were up 3.95% to 32.74p at 1018 BST.