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London — UK-based Deltic Energy -- which is working with Shell to develop two gas prospects in the North Sea -- said July 16 it had rejected an "unsolicited" approach from upstream investment company Reabold for a potential takeover offer.

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Deltic -- which last month changed its name from Cluff Natural Resources to reflect the company's transition into an operator -- said the proposed possible offer did not place an "appropriate value" on Deltic.

Reabold said July 15 it was in the process of evaluating a possible all-share offer for Deltic that would value the company at some GBP12.3 million ($15.4 million).

Deltic said the proposed offer placed "no value at all" on its share of the two potential high-impact exploration wells with Shell and did not even reflect the existing cash balance of the company.

"The board of Deltic does not believe there to be a strong rationale, commercial logic or sufficient operational synergies that would justify a combination of the two businesses," it said.

North Sea prospects

Deltic and Shell have formed joint ventures to develop license P2437 -- containing the 291 Bcf (8.2 Bcm) Selene prospect -- and license P2252 containing the 309 Bcf Pensacola prospect.

At Pensacola, a first exploration well is expected to be drilled in the second half of 2021, while at Selene a first well is expected in 2022, according to Deltic's latest guidance from June.

"Unlike many of its competitors, Deltic is fully funded to deliver on its existing strategy, including for its share of two potential high-impact exploration wells, which Shell farmed into following an extensive period of technical and commercial due diligence, as well as its working capital requirements through to mid-2022," Deltic said.

Reabold said it was "currently only minded" to proceed with the possible offer on the pre-condition that a recommendation from the Deltic board was ultimately forthcoming and had recently started preliminary discussions with Deltic to seek a recommendation.

"However, Reabold was disappointed to receive a letter from the Deltic board unequivocally rejecting the possible offer," it said.

Reabold is best known for its 39% economic interest in the West Newton field onshore the UK, which it owns through its 59% stake in operator Rathlin Energy.

Reabold last year said West Newton could turn out to be the UK's biggest onshore gas field and largest onshore hydrocarbon find in the country since 1973.