Irish independents to merge E&P interests

Offshore staff

DUBLIN, Ireland -- San Leon Energy has agreed to acquire Irish independent Oil & Gas. The companies’ boards recommend the takeover to their shareholders in the form of a share-for-share arrangement, which values Island’s entire issued share capital at £13.74 million ($20.9 million).

“San Leon’s acquisition of Island will create the leading Irish-based oil and gas exploration and development business,” says Oisín Fanning, San Leon’s chairman. “The unparalleled strategic fit of the two companies’ complementary assets and resources is particularly compelling.”

San Leon first proposed the merger last October. Island has been struggling to raise capital to pay its share of development costs in its license interests. This has held up progress in various planned offshore projects, including attracting license farm-ins.

Island holds a spread of E&P interests offshore Ireland. San Leon’s board claims that as gas production declines from the Star Energy-operated Kinsale field in the Celtic Sea, potential satellites such as Island’s Old Head of Kinsale and Schull fields will become more viable to develop. Star also is looking to build a gas storage business in this region of southern Ireland.

Recently, geophysical contractor PGS agreed to fund 40% of the costs of San Leon’s own seismic program in exchange for taking equity in the company. Island’s board believes that extending this program to Island’s deepwater exploration interests in the Irish Atlantic margin would provide savings and accelerate development of any subsequent discoveries.

Both San Leon and Island also hold interests in assets in Morocco, including the Sidi Moussa and Foum Draa offshore permits. As for Island’s holdings offshore Albania, San Leon’s board intends to conduct a strategic review following completion of the takeover.

02/25/2010