Trinity Exploration and Touchstone Exploration are set to merge after the two companies reached an agreement on the terms of a deal.
In joint statements issued this morning, Touchstone said it would acquire the entire issued and to be issued ordinary share capital of Trinity in a deal with £24.1m.
Under the terms of the proposed deal, Trinity shareholders would receive 1.5 new Touchstone shares for each Trinity share. Based on Touchstone’s closing share price of 41.25p as of 30 April 2024, the acquisition represents an implied value of 61.9p per Trinity Share
The deal is priced at a premium of approximately 71.9 per cent to the closing price per Trinity Share of 36p on 30 April 2024.
Touchstone Exploration said the deal would create a Trinidadian operator of scale and would position the combined group as one of the leading independent operating companies dedicated to investing in both onshore and offshore activity to grow Trinidadian oil and gas production.
On a pro-forma basis, the group would have between 11,700 and 12,400 barrels per day of production, with combined proved plus probable reserves of approximately 80.3 MMboe. When the deal has been completed, the enlarged group will have the financial resources to be able to scale up its operations and there’s also potential for efficiencies and significant synergies.
Touchstone said: “The addition of Trinity’s producing and adjusted earnings before interest, tax, deprecation and amortisation (EBITDA) -generative assets into the enlarged group is expected to be accretive on a funds flow from operations basis in the first full year after the completion of the acquisition before taking account of expected recurring annual cost synergies realised.”
Commenting on the acquisition, Paul Baay, the president and chief executive officer of Touchstone Exploration, said: “We believe this acquisition represents a compelling strategic opportunity which will deliver enhanced scale, balance sheet strength, and growth opportunities.
“The business combination will create an upstream oil and gas company of increased scale in Trinidad, enhancing our ability to deliver growth in reserves, production and cash flows for the benefit of our combined shareholders and local stakeholders.”
The president and chief executive officer added: “The combined group will be able to invest in multiple development programmes and accelerate the growth potential of the enlarged asset base, thereby giving us the potential to materially enhance long-term value.”