NRG Investments Inc. plans to acquire struggling Vancouver oil and gas exploration firm Gemini Energy for $98.4 million.
Under the deal, NRG will pay $4 for each of Gemini's issued and outstanding shares, giving Canadian shareholders the option of receiving one NRG share for each Gemini share.
Gemini has been struggling over the past year with declining revenue and profit from lower prices and decreasing production. In its first quarter ending March 31, 2007, revenue dropped 39% to $3.9 million compared with $6.4 million in the same period in 2006. Net income fell to $188,653 from $2.3 million.
Quarterly natural gas production dropped to 667 million cubic feet from 865 million cubic feet in the same two quarters. The average price fell 22% to $5.64 per million cubic feet from $7.25 per million cubic feet.
The lower quarterly numbers continued from a 24% decline in annual revenue and a 52% drop in annual profits for the year ending December 31, 2006. Revenue fell to $19.2 million from $25.4 million in 2005, and net income fell to $1.4 million from $7.2 million.
NRG's acquisition of Gemini is subject to shareholder, regulatory and other customary approvals. It is also subject to Gemini Energy selling 12 million shares of Exxel Energy to Q Investments Ltd.
Gemini's share price range during the past week: between $2.20 and $3.55; 52-week high: $4.06; 52-week low: $1.95.