Pharos Energy (LSE:PHAR), the oil and gas producer with assets in Vietnam and Egypt, has agreed to a recommended all-cash takeover by Ratio Petroleum Energy LP, a global exploration vehicle backed by the wider Ratio Energies Group, which has operated in the exploration and production business for more than three decades.
The consideration is entirely in cash, with Pharos directors, advised by Rothschild and Co, concluding the terms are fair and reasonable after an extended review of strategic alternatives including inorganic growth options.
The rationale centres on Pharos's structural constraints: its TGT and CNV producing fields in Vietnam are mature and declining, it holds a non-operated position at both Egyptian concessions, and it has been unable to secure a farm-in partner to fund exploration drilling on Blocks 125 and 126 in Vietnam.
Ratio, which recently expanded its strategy to include producing assets alongside its exploration focus, argues the combination creates a balanced production and exploration company with the balance sheet depth to develop the combined asset base.
"Our producing assets are relatively mature and the future sustained growth of the business needs significant investment from a scaled operator with an appetite for exploration risk," said Katherine Roe, Pharos chief executive.
The deal is conditional on regulatory clearances in Vietnam and Egypt and court sanction of the scheme.
