TIDMBCE
RNS Number : 9216J
Beacon Energy PLC
16 December 2022
16 December 2022
Beacon Energy plc
("Beacon Energy" or the "Company")
Reverse Takeover Transaction and Corporate Update
Conditional Acquisition of Rhein Petroleum GmbH
Beacon Energy plc ( AIM: BCE ), the energy company seeking
growth through acquisition or farm-in to interests in discovered
upstream projects, is pleased to announce that the Company has
entered into a conditional Share Purchase Agreement ("SPA") with
Tulip Oil Holding B.V. ("Tulip") and Deutsche Rohstoff A.G.
("DRAG") (collectively, the "Sellers") relating to the purchase of
the entire issued and to be issued share capital of Rhein Petroleum
GmbH ("Rhein Petroleum"), (the "Proposed Transaction").
The board of Beacon Energy ("Board") considers the Proposed
Transaction to represent a transformational, value enhancing
transaction for shareholders, which is fully aligned with Beacon
Energy's growth strategy.
The Board believes the Proposed Transaction will deliver:
-- A full-cycle portfolio of largely operated production,
development, appraisal and exploration assets located onshore
Germany, a low political risk jurisdiction over licences as set out
below
-- A near-term active work programme designed to enhance production and cash flow
-- An experienced operating team in Rhein Petroleum that has a
track record of exploration, appraisal, development and production
operations
-- Strong HSE record and a firm commitment to environmentally responsible hydrocarbon production
-- A well-understood existing production base, generating immediate revenue
-- A material 2P net reserve base of 3.85 mmbbl and a 2C net
contingent resource base of 22.96 mmbbl, located across four core
assets as assessed by SGS Nederland B.V, and to be included in a
Competent Person's Report ("CPR"), which will form part of the
Admission Document to be sent to shareholders in due course
-- A commercially attractive programme with the economic results
of the CPR describe an NPV10 valuation of EUR52.8 million from the
development and production of the 2P reserve base, assuming, inter
alia, capex of EUR15.7 million for a 3 well programme and
facilities upgrade and utilising forward oil pricing as at 14
November 2022
-- An investment case which will be the basis for Beacon Energy
seeking to carry out a placing to new and existing investors
("Placing") to raise approximately GBP6 million net of costs to
finance the drilling , completion, tie-back and bringing into
production the Schwarzbach-2 well and required working capital.
Production from this well will be used to fund the forward
development programme
-- Access to a built-in growth pipeline of onshore, material,
high-margin, low-risk and near-term development and appraisal
opportunities
-- A mix of low, medium and higher risk exploration
opportunities with a cumulative best estimate un-risked net
prospective resource base of 207.83 mmbbl with individual prospects
that are potentially material
-- Entry into a region where the Company sees significant
potential for growth and where, over time, it believes a
substantial business can be built
-- Acquisition of Rhein Petroleum which, for the financial year
ended 31 December 2021, Rhein Petroleum reported audited revenue of
EUR2.9 million, operating loss of EUR1.2 million and a loss after
tax and interest of EUR1.5 million under German accounting
standards. As at 30 June 2022, Rhein Petroleum reported unaudited
total assets of EUR11.9 million and net liabilities of EUR12.9
million (including EUR22.0 million shareholder loan liability which
will be acquired by Beacon at Completion) under German accounting
standards
In addition:
-- To provide certainty and continuity for the Company, current
Interim CEO Larry Bottomley becomes CEO on a permanent basis,
effective immediately
-- The Competent Persons Report covering the material assets of
Rhein Petroleum will be included in an AIM Admission Document to be
published in due course and an updated corporate presentation
describing the acquisition will be made available on the Company's
website www.beaconenergyplc.com shortly
Consideration
Under the terms of the SPA, the Sellers will receive: (i) new
ordinary shares in Beacon Energy such that, following the intended
Placing (described more fully below), the Sellers will collectively
hold 33.2 per cent of the enlarged share capital of Beacon Energy
(the "Consideration Shares"); and (ii) contingent consideration
based on the future production of the Rhein Petroleum assets based
on future production (the "Earn-Out") . Tulip is currently
interested in 90 per cent. of the issued share capital of Rhein
Petroleum, with DRAG, a listed oil and gas company in Germany,
interested in the balancing 10 per cent. The Consideration Shares
will be issued to both current shareholders pro rata to their
existing holdings in Rhein Petroleum.
The Earn-Out comprises a contingent production consideration in
cash, after provision for royalties levied by the relevant German
states ("Net Production") such that the Earn-Out payment on the
current discoveries is 10 per cent of Net Production proceeds.
There is also a contingent 3 per cent production earn-out on any
future discovery that leads to production from the current
exploration licences.
In addition to a vendor-financed loan of EUR1.9 million, to be
repaid from production, Beacon Energy will be seeking to carry out
a placing to new and existing investors ("Placing") to raise
approximately GBP6 million net of costs to finance the drilling ,
completion, tie-back and bringing into production the Schwarzbach-2
well and required working capital. Directors of Beacon Energy
intend to participate in the Placing. In addition, Tulip also
intends to participate in the Placing to acquire an additional
approximately 6.8 per cent of the enlarged share capital of the
Company, such that Tulip is expected to hold approximately 36.7 per
cent of the issued share capital of the Company at Completion.
In addition to the Consideration Shares, the Company will also
issue to the Sellers warrants over new Ordinary Shares which shall
each have an exercise price of GBP0 and may only be exercised in
the event another existing warrant or option holder in the Company
exercises existing warrants or options and only in the same
proportion as that exercised (the "Top Up Warrants"), such that the
percentage holding of each of the Sellers at Completion shall be
maintained, ceteris paribus, pre and post the exercise of some or
all of the existing options and warrants in the Company.
The Consideration Shares and Placing shares held by Tulip on
admission to AIM will be subject to both lock-in terms and a
relationship agreement, full details of which will be set out in
the Company's Admission Document.
Reverse Takeover Process
The Transaction is classified as a reverse takeover pursuant to
the AIM Rules for Companies. The Company's ordinary shares will
remain suspended from trading on AIM until such time as the
Proposed Transaction is completed, which is anticipated will be the
second business day following the satisfaction or waiver of the
final condition which the SPA is subject to. In the event that the
Proposed Transaction does not proceed the Company's share will
remain suspended from trading as Beacon Energy has been a cash
shell on AIM for more than 6 months. Completion of the Transaction
is subject to, inter alia :
-- certain regulatory consents and confirmations;
-- approval by Tulip's shareholders at a general meeting to be convened in due course;
-- approval by Beacon Energy's shareholders at a general meeting
to be convened in due course ("General Meeting"), including the
passing of the Rule 9 Waiver resolution (as described below);
-- finalisation of the Placing; and
-- the publication of an AIM Admission Document.
The Admission Document, which will include a notice of General
Meeting, is expected to be issued in due course.
It is noted that the notice of General Meeting within the
Admission Document is also expected to include a resolution in
respect of a waiver from Rule 9 of the Takeover Code in light of
the fact that Tulip is expected, on Admission, to hold over 30 per
cent of the Company's share capital as enlarged by the issue of the
Consideration Shares and the Placing.
Rule 9 Waiver Resolution
Tulip is expected, on Admission, to hold 36.7 per cent. of the
Company's share capital as enlarged by the issue of the
Consideration Shares and the Placing. The shareholders of Tulip are
presumed to be acting in concert (as defined in the Takeover Code)
with each other for the purposes of the Takeover Code. The
shareholders of Tulip are not presumed to be in concert (as defined
in the Takeover Code), with DRAG or the shareholders of DRAG.
The Company will apply to The Takeover Panel ("Panel") for a
waiver from the obligation for Tulip to make a general offer for
the Company that would otherwise arise as a result of the issue of
the Consideration Shares and Placing shares to Tulip and the
exercise by Tulip of any Top Up Warrants, subject to the approval,
on a poll, by a resolution of the Company's independent
shareholders, which will be proposed at the General Meeting (the
"Whitewash Resolution"). Accordingly, with the consent of the
Panel, the Whitewash Resolution will be proposed at the General
Meeting and will be taken on a poll at the General Meeting, notice
of which will be set out in the Company's Admission Document to be
published in due course.
Commenting on the signing of the SPA, Beacon Energy
Non-Executive Chairman, Mark Rollins, said :
" We are delighted that we have signed the SPA with Tulip and
DRAG on this compelling European O&G opportunity which has the
potential to build a self-funding platform for growth from cash
generative producing and development oil assets. As a Board, we
have been impressed by the professionalism of the Rhein Petroleum
operating team and look forward to working with them in unlocking
the potential in the portfolio.
"I am also pleased that Larry has taken on the role of CEO,
having assumed the role on an interim basis earlier this year at an
important juncture for the Company. Larry, and the Board, have
since made considerable efforts through this year, delivering
important legacy outcomes and progressing the business development
pipeline culminating in this SPA.
"We are also very pleased to have been able to call on the
services of a high quality group of consultants with direct
expertise in M&A and all the associated processes. As we enter
an exciting period, we will call on their deep experience and
knowledge, along with that of the rest of the Board, which will be
key to our efforts to deliver on our strategy. "
Beacon Energy CEO, Larry Bottomley, added :
"Since assuming the role of CEO on an interim basis, the entire
Board has worked tirelessly to help me deliver value accretive
opportunities from our compelling business development pipeline. It
is with satisfaction that we have delivered the SPA and I take on
the CEO role with considerable enthusiasm to develop a
self-funding, production-led platform for growth. I look forward to
working with the extended team on the acquisition and reverse
takeover which, once complete, will underpin the Company with
immediate cash flow and provide an active near-term work programme
designed to grow production, cash flow and value for our
shareholders."
Further announcements will be made in due course, as
appropriate.
Further information on Rhein Petroleum
Table 1: Summary of Rhein Petroleum's oil and gas licences
Source: CPR - Rhein Petroleum GmbH. SGS Nederland B.V.
(Subsurface Consultancy)
Enquiries:
Beacon Energy plc
L arry Bottomley (CEO) +44 (0)1624 681 250
Strand Hanson Limited (Financial and Nominated Adviser)
Rory Murphy / James Bellman +44 (0)20 7409 3494
Buchanan (Public Relations)
Ben Romney / Jon Krinks +44 (0)20 7466 5000
Tennyson Securities Limited (Joint Broker)
Peter Krens / Ed Haig-Thomas +44 (0)20 7186 9030
Optiva Securities Limited (Joint Broker)
Christian Dennis +44 (0)20 3411 1881
For further information, please visit www.beaconenergyplc.com and @BeaconEnergyPlc on Twitter
To register for Beacon Energy's email alerts, please complete
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https://www.beaconenergyplc.com/media-centre/news/#alerts
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018.
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END
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