ROC, Horizon to merge and create a ‘leading Asian E&P company’

Roc Oil Company Limited (ROC) and Horizon Oil Limited (Horizon) today announced that they have entered into a Merger Implementation Deed (MID) under which they have agreed to merge via a Horizon Scheme of Arrangement (the Merger).

In its press release ROC has said that the transaction will bring together two highly complementary E&P companies to form a single Asian E&P company.

Horizon shareholders will receive 0.724 ROC shares for each Horizon share they hold, being the exchange ratio implied by the 10 day VWAP of Horizon and ROC shares ending on 23 April 2014, the last day on which Horizon and ROC shares were traded prior to the announcement of the Merger. Following completion of the Merger, ROC shareholders will own approximately 42% of the merged company and Horizon shareholders will own approximately 58%.

The proposed Merger has the unanimous support of both the ROC and Horizon Boards. In the absence of a superior proposal and subject to an Independent Expert concluding that the Merger is in the best interests of Horizon’s shareholders, the Board of Horizon unanimously recommended that Horizon shareholders vote in favour of the Merger, and each Horizon Director intends to vote in favour of the Merger in relation to shares held or controlled by them.

The Horizon and ROC Boards believe that the merged group will be better positioned for growth compared to either company on a standalone basis, and is expected to deliver significant benefits to Horizon and ROC shareholders.

Horizon CEO Brent Emmett said: “The combination of complementary core assets and activities makes strong strategic sense. Horizon has been focused on building a leading portfolio of Asian focused assets and the opportunity to merge with ROC represents a significant step towards achieving that objective.” 

ROC CEO Alan Linn said, “In recent years ROC has developed and delivered a regionally focused low risk operated portfolio of oil producing assets which contain significant near field potential. We have also been actively building our regional exploration portfolio. This exciting combination with Horizon strengthens the regional commitment and offers significant potential for our highly skilled teams to work together and build a “stand out” regional developer and explorer. The complementary assets provide the merged company with a tremendous platform from which to deliver a shared strategy for value growth in the Asian region.”

Subject to a successful merger Mike Harding (current Chairman of ROC) will be Chairman of the merged group and Brent Emmett (current CEO of Horizon) will be CEO and Managing Director of the merged group. Fraser Ainsworth (current Chairman of Horizon) will be appointed as a Non-Executive Director of the merged group and Alan Linn (current CEO of ROC) will continue with the merged group in the role of President of ROC Oil Malaysia until April 2015.

Transaction rationale
Roc says that the Merger creates a leading Asian E&P company, providing a platform for significant potential growth and value realisation in the Asian oil and gas sector. The merged group will have:

• a pro forma market capitalisation of ~A$800m;
• net 2P reserves of 36.9mmboe (approximately 95% liquids);
• net 2C contingent resources of 120.7mmboe; and
• combined CY14 indicative working interest production estimated at 5.5 mmboe (approximately 95% liquids).