25 May 2012

Transformation at Rheochem

04/03/2011 Robert Tyerman

Rheochem (RHEP) is changing its name to Lochard Energy after agreeing to sell its key oilfeld services and drilling fluids businesses for £28 million. Based in Western Australia and quoted Down Under and on AIM, the company, steered by entrepreneurial chief executive officer and significant shareholder Haydn Gardner, will now become a pure oil exploration and production concern, with an initial focus on its 10 per cent in the Athena North Sea oil project.

Under the deal, New York-quoted Newpark Resources is to pay an initial £14.8 million for the international services and fluids operations, with up to another £13.8 million payable between now and next February provided the fluids side meets certain earnings targets. Rheochem, which raised £1.6 million at 5p a year ago for Athena, says it expects attributable starting flow rates from the project to be about 2,000 barrels a day net to its half-owned subsdiary Zeus Petroleum.

The company argues the £38 million it expects to receive as its share of Athena's first year of production is three times the revenue generated by the drilling fluids business in the 2009-10 financial year. Gardner contends the sale 'unlocks significant value for shareholders and allows us to meet our commitments to the Athena field.'

Floated at 16p in 2004, Rheochem shares bottomed at 5.13p during the past year. They have since trebled to 15.75p, valuing the company at £39.3 million and offer continued speculative potential.

Tags: AIM market, Australia, Disposal, Haydn Gardner, Penny shares

Sector: Oil Equipment, Services & Distribution

Companies: Lochard Energy

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