3i and Arclight Capital Partners-backed oil and gas company Venture Production has bought troubled explorer Wham Energy for £14.2 million ($28 million, $21 million).
Wham shareholders will receive £0.20 per share and 0.03 New Venture shares, equivalent to £0.45 per share. This is a premium of 65.6 percent to New Venture’s share price yesterday. Shareholders may also elect to accept a deferred consideration note linked to Wham’s exploration prospects.
3i made a growth capital investment of over $100 million (€74 million) recently in part-listed Venture Production to take a stake of about 10 percent. The size of Arclight’s parallel investment was not disclosed. 3i’s spokesperson said the acquisition was the first implementation of a larger planned buy and build strategy.
Wham was brought to market in September 2005, two years after being founded by former Amoco executives, however its share price collapsed after it revealed the first well it had drilled had no gas or oil. It has since been unable to drill another well due to a shortage of available rigs.
Wham’s spokesman said: “The company has two promising assets ready to be drilled but the cost has gone sky high and so as a small company, Wham will benefit from the bigger Venture’s involvement.”
Mike Wagstaff, chief executive of Venture, said in a statement while exploration is not Venture’s core field, Wham’s assets proximity to existing infrastructure meant any discovery could be developed rapidly.
The oil and gas sector has been an area of continued activity in recent years for buyout firms looking to profit from high oil prices. This month Warburg Pincus also led a $1 billion investment in Antero Resources, alongside Lehman Brothers and Yorktown Energy Partners.