T5 Oil and Gas targeting first takeover deal this year

T5 Oil and Gas, the exploration investment firm headed by former Tullow Oil executives, has designs on becoming a publicly listed “multibillion-dollar” company and is targeting completion of its first reverse takeover deal before the end of this year.

Speaking at a natural resources investor conference in London, T5’s chief financial officer Peter Heintzelman outlined that the company’s aim is to build “a publicly listed billion-dollar Africa and Middle East exploration and production company, creating long-term value for our stakeholders”.

He said this would be done by “creatively executing [merger and acquisition] transactions, utilising our distinct technical and funding capabilities”.

Non-executive chairman Pat Plunkett, a former chairman of Tullow Oil, recently said that T5 is set to become very active in the marketplace this year, and is already eyeing up firms and assets in need of investment.

He noted that T5 has identified around six investment targets in the company’s regions of interest, mainly via a reverse takeover model, which private companies use to become publicly traded without resorting to an IPO.

Mr Heintzelman’s presentation suggested that, during the second half of 2015, T5 will complete its first successful reverse takeover transaction, and will also “pursue and fund corporate and asset roll-up opportunities”, and progress existing assets — the company has acreage in Senegal.

T5’s board also includes former Tullow executives Matt O’Donoghue, Andrew Windham, and Garry Sheehan, as well as former Valiant Petroleum executive Philip Crookall.

The presentation said the board aims to replicate its success with Tullow, but “in a much shorter timeframe”.

Several of the T5 team were Tullow Oil board members when the Irish-founded exploration firm grew its market capitalisation from €316m to over €12bn between 2000 and 2010.

Mr Heintzelman said that the exploration and production sector is currently out of favour and valuations reflect no value for exploration, making it an “ideal time” to build asset bases.

“Restructuring in the sector is creating opportunities to acquire inherently valuable production assets, at attractive prices,” said Mr Heintzelman. “Assets are and will become available, as funding dries up for the [exploration and production] sector. Our skills and experience are ideally suited to this market, where dealmaking and the calibre of people attract opportunities.”

Mr Heintzelman said the industry is at the low point of the cycle and, as exploration success occurs, valuations will improve.

In the Middle East, he said, T5 is “evaluating a number of high-potential development and production opportunities” and that while many large-scale developments are operated by industry majors, “there are transformational opportunities available for a nimble and fast-moving independent like T5”.

Earlier this year, T5 distanced itself from speculation linking it to London-based, African-focused explorer Afren. It said it is not interested in mounting hostile bids for potential targets.

It has also been linked with loss-making UK explorer Gulf Keystone, with sources suggesting a $50m reverse takeover of Gulf could be completed by the summer.

Management since suggested any such deal could take longer to progress.


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