San Leon Energy agrees acquisition terms with Island Oil & Gas

25 February 2010

San Leon Energy, the Irish exploration and production group has finally agreed the terms of a deal to buy fellow AIM listed company Island Oil & Gas.

San Leon made its intentions clear over a potential deal back in October last year and the finer details of the acquisition have not really changed since then. Under a scheme of arrangement between the two sides, Island shareholders will receive 1 new San Leon share for every 2.3 Island shares they hold in a move that values the company at £13.74 million.

The price is a premium of around 65% to Island’s 6.125 pence per share closing price yesterday and a premium of 32.6% to the 7.625p per share closing price back in October, when the offer period first started.

[i.e. we shall get 10 p per share if we sell them]

San Leon wants to combine the two companies with a view to building a strong Irish-based oil and gas exploration and development business. It already has extensive knowledge of some of Island's assets: its two Moroccan onshore assets (the Tarfaya area and Zag basin), its recently acquired Moroccan offshore assets at Sidi Moussa and Foum Draa and the Netherlands offshore Amstel Field, in which both San Leon and Island have a royalty interest.

The company also has good working knowledge of the majority of Island's Celtic Sea and Atlantic Margin assets and is expected to undertake a strategic review of Island's Albanian assets following the combination.

In particular, San Leon is thought to be eyeing the opportunities presented by declining offshore gas production from the Kinsale field in the Celtic Sea. Island holds stakes in the Old Head of Kinsale (Part Block 49/23) and Schull Field (Block 57/2) and these are expected to become increasingly viable as they head towards production.

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

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