Africa focused oil explorer Tangiers Petroleum (TPET:AIM) sees its shares suspended after falling 18% to 10.25p earlier today as its executive chairman Eve Howell and non-executive director Max de Vietri quit the company citing a loss of support from major shareholders.
The announcement overshadows the company's ongoing efforts in Morocco and is likely to threaten its planned A$37 million off-market takeover of Jacka Resources (JKA:ASX). Tangiers's Australian listing was initially suspended and that's followed mid morning with the UK listing pending the appointment of new directors. Trading in Jacka's shares has also been suspended.
The deal, which was scheduled to complete next month (18 Mar), had looked to combine Tangiers' Tarfaya project in Morocco, where it holds a 25% stake and is carried by Portuguese energy firm Galp Energia (GALP:LS) on a two well programme, with Jacka's portfolio in Tunisia, Nigeria, Tanzania and Somaliland. Once complete, Jacka investors would have had 47% of the enlarged entity, with Tangiers’ backers owning 53%. The plan was for Howell to remain chairman with Jacka’s Bob Cassie assuming the managing director's role.
RFC Ambrian comments: 'We believe that the resignations were the result of a significant block of Perth-based shareholders sending in ‘last-minute’ proxies to block the reappointment of both Eve Howell and Max de Vietri at the company’s GM (scheduled for this Thursday). The timing of the arrival of the proxy votes (ie, on the day the offer for Jacka opened) seems no coincidence to us and has probably been done to try to derail the deal. However, at this point Tangiers can’t retract its offer, and we believe Jacka’s Board is likely to continue to support it as we think that it has few alternatives at present.'
It remains to be seen if the boardroom turmoil will have any impact on plans to drill the 423 million barrel Trident target offshore Morocco in the second quarter of this year – though it is worth noting that Galp is now the operator of asset so it should have control over the pace of activity.
Since joining Aim in February 2012 Tangiers has performed poorly and is now down more than 70% but ahead of today's news the company had looked to be on a surer footing, ending the year with net cash of A$6.1 million and the Galp farm-out approved by the Moroccan authorities.