Israel-based Ratio Petroleum to acquire Pharos Energy (updated)
UPDATE 2-Israel-based Ratio Petroleum to acquire Pharos Energy Adds share price in paragraph 5, more details on deal in paragraph 7
By Stephanie Kelly
LONDON, June 24 (Reuters) - Ratio Petroleum Energy RTPTp.TA has agreed to buy Pharos Energy PHARP.L in an all-cash deal valued at £124.3 million ($164 million), giving the Israel-based energy company access to production assets in Egypt and Vietnam.
The transaction comes amid heightened commodity price volatility linked to the U.S.-Israeli war on Iran, which has lifted energy companies' share prices. Against that backdrop, Pharos sought an improved offer from Ratio to reflect its stronger cash flow generation.
Under the agreement, Pharos will receive a total value of up to 28 pence in cash per share.
Ratio has already secured support from shareholders representing nearly 42% of Pharos’ share capital, including board backing.
Shares in Ratio fell as much as 11% on Wednesday to their weakest level since April. They were last trading down 5%.
REVIEW OF STRATEGIC OPTIONS
Pharos' mature producing fields and limited scale have constrained growth prospects and access to capital, prompting a review of strategic options.
Under CEO Katherine Roe, Pharos has secured licence extensions in Vietnam, repaid all debt and recovered all outstanding receivables from the Egyptian government.
Ratio intends to explore the possibility of selling down part of Pharos' interest in its Egyptian operations to a third-party partner, and to combine the company's and Pharos' portfolio of assets, it said.
It said there may be a headcount reduction.
Ratio Petroleum currently holds petroleum interests in three different basins on opposite sides of the world — Guyana, Morocco Atlantic, and the East Palawan Basin in the Philippines.
It has traditionally focused on frontier exploration, but recently shifted toward acquiring producing assets.
The deal remains subject to shareholder approval and regulatory clearances in Vietnam and Egypt, and is expected to complete in the first half of 2027.
($1 = 0.7582 pounds)
(Reporting by Stephanie Kelly; Editing by Tomasz Janowski and Jan Harvey)