Today Sound Oil Plc (LON:SOU) launched a public offer (intended offer) for 100% of the share capital of Antrim Energy, the RNS outlines the company’s intention to ”leverage Sound Oil’s portfolio.” Sound Oil has a decent balance sheet, a high impact drilling campaign, strong management and more importantly they are headed in the right direction. But what does this mean to investors.
Has clearly come off over the last few years, the company has some decent assets out in Ireland which have seen some progress however this really hasn’t been enough for the company to gain any traction in the markets. As a result the company has traded weakly and without liquidity, which in itself becomes one of the biggest issue’s to face a sub £10m market capitalized company. The management has to hold up their hands and accept they may not have had the best of luck in the world but performance has just not been good enough. Today’s offer gives shareholders some light at the end of the tunnel as together the offer will produce a company with a strong balance sheet, high impact exploration (near-term) and some production, whilst giving legs to the development of Antrim’s prospects and potential.
Sound really are in the driving seat with today’s low ball hostile approach, they will clearly benefit strongly from the acquisition as the balance sheet would grow as would the upside potential of the business from Antrim’s key Irish asset. Its a brave call for the CEO to come in hard on Antrim’s sub prime BOD however fortunes favour the brave and this really is a deal which will suit both groups of investors, as it would mean a compounding of an even stronger balance sheet whilst encompassing newsflow, a billion dollar upside drilling campaign, cornerstone investors (institutional) and a strong dynamic management team. Sound oil has a mouth watering prospect to explore over the coming months with or without this deal.
We at ValueTheMarkets believe that joining a company stepping up beats parting with your money stepping back.