San Leon to Acquire Realm Energy
Two companies active in Poland's emerging shale gas play are coming together.
San Leon Energy plc., has made a proposal to purchase all of the outstanding shares of Realm Energy International Inc. in a deal value exceeding C$14o million.
The proposed deal will see Realm shareholders receiving C$1.30 in cash; or 3.30 ordinary shares of San Leon or a combination thereof; subject to a maximum of C$17.7 million in cash (subject to adjustment) being paid to Realm shareholders in aggregate.
The terms of the acquisition value Realm at approximately C$1.30 per share, based on the San Leon volume-weighted average price for the 60 trading days prior to and including 25 August 2011 of 25 pence per share and a Canadian Dollar per British Pound exchange rate of 1.603. Up to approximately 481 million newly issued San Leon shares are expected to be issued to Realm shareholders.
The acquisition will result in Realm shareholders owning approximately 36.9% of the enlarged entity, assuming that all shareholders elect to receive the consideration payable to them fully in new San Leon shares and all of the issued and outstanding options and warrants to acquire Realm shares are exercised.
The deal is the result of a process initiated by last May, when Realm announced that it has retained GMP Securities to “identify, examine and consider a range of strategic alternatives available in connection with its interests in Poland.”
Realm shares subsequently rose significantly, driven in part by regulatory filings of two significant Realm shareholders, Soros Fund Management LLC and Enso Capital Management LLC, reporting that they had entered into a voting and tender agreement with an unidentified third party, who was "proposing to acquire all of the issued and outstanding shares" of Realm.
Realm holds a 100 percent interest in the Gniew concession in the Baltic Depression, 70 km south of Gdansk in northern Poland. Surrounding licensees include those held by Lane Energy Poland (3Legs Resources) , BNK Petroleum and Marathon Oil.
Realm also holds 50% interests in the Ilawa and Wegrow concessions, with LNG Energy Ltd. holding the remaining 50% interest.
In Germany, Realm holds the Aschen shale gas exploration concession in the Weser-Ems region in the Lower Saxony Basin. The company is also understood to have made applications for prospective shale gas concessions in Spain.
Realm recently entered into a farm-out agreement with ConocoPhillips to conduct joint exploration on licences that may be awarded as a result of these applications made by Realm in France's Paris Basin. Realm has made applications for exploration licences for 1.65 million acres in the Paris basin.
The deal adds to San Leon's position as a significant player in the Polish market where the company already holds interests in six licence areas.
San Leon and Talisman Energy have entered into a joint-venture on three of those licences in Poland's Baltic Basin. Talisman is committed to drilling a minimum of three wells and up to six wells on the three concessions to prove the shale gas play, with San Leon receiving a 40% carried interest.
In additional to its Polish interests, San Leon holds a diverse portfolio of assets in Morocco, Italy, Ireland, the Netherlands and Albania.
Related Reading:
Deal Speculation Drives Realm Energy