UK-based oil and gas company Beacon Energy is set to acquire the entire issued and outstanding share capital of German oil and gas exploration company Rhein Petroleum.
Beacon Energy has signed a conditional share purchase agreement (SPA) with Tulip Oil and Deutsche Rohstoff to purchase their stake in Rhein Petroleum.
Beacon Energy has signed a share purchase agreement (SPA) for Rhein Petroleum. (Credit: Maria Lupan on Unsplash)
Under the terms of the SPA, Tulip Oil and Deutsche Rohstoff will receive new ordinary shares of Beacon Energy, where they will jointly own 33.2% of the combined company.
Tulip currently owns 90% of Rhein Petroleum, while Deutsche Rohstoff the remaining 10%.
The companies will also receive contingent consideration based on the future production of the Rhein Petroleum assets (earn-out).
As part of the transaction, Beacon Energy’s current interim CEO Larry Bottomley will be appointed as the permanent CEO of the combined company.
Larry Bottomley said: “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.”
The transaction is considered as a reverse takeover, based on the AIM Rules for companies.
Beacon Energy will issue the consideration shares to shareholders of both Tulip Oil and Deutsche Rohstoff, pro rata to their existing holdings in Rhein Petroleum.
The earn-out includes a contingent production consideration in cash, which is around 10% of Net Production proceeds from the current discoveries, excluding royalties.
It also includes a contingent 3% production earn-out on any future discovery that may result in production from the current exploration licences.
In addition, Beacon Energy will also obtain a vendor-financed loan of €1.9 m, to be repaid from production, and will raise £6m from new and existing investors.
The company will use the funds to finance the drilling, completion, tie-back and bringing into production the Schwarzbach-2 well and required working capital.
Beacon Energy non-executive chairman Mark Rollins said: “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.”
