Fledgling oil and gas independent Parkmead Group is buying fellow Aberdeen company DEO Petroleum in a deal worth about £12.7million.
Parkmead, led by former Dana Petroleum chief executive Tom Cross, said yesterday it was paying 29.5p a share for DEO: a 40.5% premium to its 21p closing price last Friday.
The boards of both companies have agreed the deal, which is expected to complete – subject to approval by DEO shareholders – by Wednesday, August 8. DEO has a workforce of 12 people, including six contracted employees.
Parkmead said it already had irrevocable undertakings and a letter of intent supporting the takeover in respect of 56.3% of DEO’s issued stock.
Mr Cross said: “This deal will add significant value for both Parkmead and DEO shareholders.
“The enlarged group will be stronger and better positioned, with a wider base of oil and gas assets in the UK and Netherlands spanning the whole upstream opportunity-cycle from exploration through appraisal, development and production.”
DEO – focused on building a portfolio of profitable UK North Sea assets with near-term exploration potential – said it would improve the deliverability of its Perth project, from which it aims to start production this year.
Urging investors to back the deal, chief executive David Marshall said: “Shareholders can look forward to value growth from the creation of one of the most experienced and innovative companies operating in the natural-resources sector.”
Alternative Investment Market-listed Parkmead has production and development assets in Europe and Africa. It started drilling its first well in the North Sea, on the Platypus gas field, just last month. Parkmead also recently made its first acquisition of producing assets, from explorer Dyas, for £6.2million.