Egdon Resources plc has agreed to be sold for £26.64 million in cash to its majority shareholder Petrichor Partners LP which plans to delist the company.
PETRICHOR
Petrichor is a wholly owned subsidiary of HEYCO Energy Group Inc.
The parent company of HEYCO Energy Group Inc and Petrichor is Explorers Petroleum Corp, which is controlled by George Yates whose family has been in oil and gas since the 1920s.
TERMS
The deal covers Egdon’s entire issued and to be issued ordinary share capital, apart from the 43.79% already owned by or on behalf of Petrichor.
The acquisition, expected to complete during Q3 2023, is at a 96% premium share price of 4.5 pence per share to the closing share price of 2.3 pence on 16 May 2023.
Egdon’s directors hold 14.6m shares representing 2.69% of the company and Harbour Energy plc and Union Jack Oil plc own a total of 62.7m shares (11.53%). All have given irrevocable undertakings to sell.
In total, Petrichor has received irrevocable undertakings for a total 77,382,106 shares (14.23%), giving Petrichor a current total 58% holding in Egdon.
Other notable shareholders include investment manager Patrick Evershed CBE (and family) with 5.93% and Hargreaves Lansdown Asset Mgt with 5.6%.
The court-sanctioned acquisition is subject to court and shareholder approval.
UNDERVALUED
In a statement, Petrichor said that Egdon would be delisted from the stock market.
“HEYCO Group believes the timing is right to acquire Egdon and take it private, as HEYCO Group believes that the public market continues to undervalue its assets, including the impressive Wressle development.
“Bringing Egdon into the HEYCO Group will create efficiencies, economies of scale, and, most importantly, add valuable assets and experienced personnel to its portfolio.
“Additionally, owning Egdon will allow HEYCO Group to more efficiently deploy capital and human resources to its most valuable projects across the UK, as well as Spain and the United States.”
INTERESTS
Egdon owns conventional onshore oil and gas assets of Keddington, Fiskerton Airfield Kelsey and its flagship producing Wessle oil field as well as multiple shale gas licences in the East Midlands.
Its interests also include onshore Kirkleatham gas field and offshore non-operated Ceres gas field in the North East; and non-operated onshore Avington and Waddock Cross oil fields in the South East of England.
HEYCO was part of the group that began production at the Avington field in southern England in 2007.
Managing director Mark Abbott said that Egdon had a high regard for Petrichor and the HEYCO Group which had helped the company reach profitability.
“There is a good deal of mutual respect between our groups and we are pleased that Egdon will continue its activities in safe hands.
“After considering all strategic options and recognising the challenges, the recommended acquisition provides shareholders with an opportunity to realise a cash exit at an attractive premium.”
Egdon was formed in 1997 by Andrew Hindle and Mr Abbott and in 1998 was awarded its first licence followed by its first operated licence in 2000.
In 2004 the company listed on the alternative investment market (AIM) of the London Stock Exchange.
In January 2008 Egdon demerged its gas storage business, Portland Gas plc (now renamed Harland and Wolf), and refocused on exploration and production.
SUPPORT
HEYCO chairman and chief executive officer George Yates added that Egdon was a “very strong enterprise with current production and a number of potential opportunities”.
“As a long-time shareholder, we have held the belief that the public market hasn’t fully recognised Egdon’s full value.
“The acquisition allows us to more effectively support Egdon by directly infusing capital and leveraging our combined technical and managerial expertise.”
HEYCO GROUP
HEYCO is an upstream energy portfolio group that “delivers strategy, sophisticated technology, and capital” to oil and gas exploration projects in the United States and Europe.
The group has invested in and provided technical advice to Egdon for more than 20 years.
Egdon will add to HEYCO’s expanding European portfolio which includes the acquisition of a gas field in Northern Spain and the opening of a Madrid office in 2022.
HEYCO has its headquarters in Dallas, Texas with offices in Roswell, New Mexico, and Madrid.
Its private owners are members of the Yates family of southeast New Mexico.
George Yates is the grandson of pioneer oilman Martin Yates, who with his partners discovered the first commercial oil well on state land in New Mexico in 1924.
In 1969, pioneer oilman and wildcatter Harvey Yates founded Harvey E. Yates Company, the historic cornerstone of HEYCO Energy Group.
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