M&A

Thursday, May 14 2009 by emptyend

I've set up this thread as a "home" for any live topics relating to M&A in the Oil sector.

With virtually every stock in the sector continuing to trade well below estimated NAVs, there will be frequent bid situations emerging. Some of these will be agreed bids but, in the present climate, unsolicited bids are also highly likely.

I'm starting the ball rolling with a link to an Australian bid situation, in which the target company (called Target Energy, funnily enough) is rebutting a hostile bidder in typically strong Aussie terms: http://newsstore.theage.com.au/apps/previewDocument.ac?docID=GCA00953206TEX&f=pdf

The link may take some time to download - it is to a 162 page document giving chapter and verse on why Target recommend rejection of a bid that they (and their professional advisers) consider values Target at around HALF its true value. The relevance of the link is that the Grant Thornton section of the document demonstrates a range of different ways of trying to value an E&P company and is therefore of some generic interest to people who own shares in future bid targets.

Target's shares recently hit a low of 2.5 cents before the bid was tabled in mid-April. They are now 5 cents. Grant Thornton (acting for Target) reckon the bid is worth around 6.35c, whereas they think Target is actually worth around 11.9c per share......in other words they reckon that Target was, at its recent lows, trading at only 21% of its true value. So........it will be interesting to see how the defence gets on. [Edit 20/7/09: Successful defence - see http://www.stockopedia.co.uk/forum/view/28067/ma?comment=121#121 ]

What is also interesting from the perspective of a UK holder is that the non-exec Chairman of Target, Didier Mercia, is also a director of Aminex. Holder of Aminex will know that they are another company that has US assets (like Target) that are being substantially undervalued by the market at present.....so it is nice to see Aminex getting a bit of first-hand experience before the predators arrive, in turn, at their door! ;-0

Feel free to add any other bid situations of interest to this thread. [Edit: Do not, however, use it to speculate endlessly about the bid prospects for specific companies, especially where there is little likelihood of M&A news in the near future. Contributions which digress from matters of general sector interest are liable to be removed].

Filed Under: Energy,

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686 Posts on this Thread show/hide all

	emptyend	28th May '12	667 of 686
In reply to djpreston, post #665 Can't argue with that - though the announcement so late in the day (why?) seems to have precluded investors getting their heads around the deal. Presumably some kind analysts will give a steer in the morning....
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28th May '12

667 of 686

In reply to djpreston, post #665

Can't argue with that - though the announcement so late in the day (why?) seems to have precluded investors getting their heads around the deal.

Presumably some kind analysts will give a steer in the morning....

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	djpreston	28th May '12	668 of 686	1
Well pmg way over Nav but the deo deal is well below Mac so I suppose you can say it sort of balances out..
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	Isaac	1st Jul '12	669 of 686	3
Heritage Oil to buy £541m Nigerian oil assets from Shell Heritage Oil has agreed to buy a parcel of Nigerian assets from Royal Dutch Shell and its partners for $850m (£541m), as it seeks to build a major presence in the country. The FTSE 250 company, led by chief executive Tony Buckingham, has formed a Nigerian joint-venture called Shoreline to buy a 45pc stake in a major onshore oil producing block known as OML 30. Shell owned 30pc of the block, with Total and ENI as minority partners. The majority 55pc stake is held by the Nigerian National Petroleum Corporation. The deal, Heritage’s first foray into the country, will significantly increase its production, from 605 barrels of oil per day (bpd) currently to 11,354bpd. Heritage’s management believes production can be increased further. The pending acquisition will also represent a more than three-fold increase in Heritage’s proven and probable reserves, to 278m barrels. Mr Buckingham said the deal would be “transformational” for Heritage. The deal will be funded through a $550m bridge finance loan from Standard Bank, and a subsequent $370m rights issue. The transaction is classified as a reverse takeover under listing rules, as Heritage’s market value on Friday night was £318m, and as such will need shareholder approval. http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/9367374/Heritage-Oil-to-buy-541m-Nigerian-oil-assets-from-Shell.html A bit annoyed the acquisition will be funded by RI given a consiuderable amount of cash was spent nuying back shares much higher up.
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1st Jul '12

669 of 686

Heritage Oil to buy £541m Nigerian oil assets from Shell
Heritage Oil has agreed to buy a parcel of Nigerian assets from Royal Dutch Shell and its partners for $850m (£541m), as it seeks to build a major presence in the country.

The FTSE 250 company, led by chief executive Tony Buckingham, has formed a Nigerian joint-venture called Shoreline to buy a 45pc stake in a major onshore oil producing block known as OML 30. Shell owned 30pc of the block, with Total and ENI as minority partners. The majority 55pc stake is held by the Nigerian National Petroleum Corporation.

The deal, Heritage’s first foray into the country, will significantly increase its production, from 605 barrels of oil per day (bpd) currently to 11,354bpd. Heritage’s management believes production can be increased further.

The pending acquisition will also represent a more than three-fold increase in Heritage’s proven and probable reserves, to 278m barrels.

Mr Buckingham said the deal would be “transformational” for Heritage.

The deal will be funded through a $550m bridge finance loan from Standard Bank, and a subsequent $370m rights issue. The transaction is classified as a reverse takeover under listing rules, as Heritage’s market value on Friday night was £318m, and as such will need shareholder approval.

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/9367374/Heritage-Oil-to-buy-541m-Nigerian-oil-assets-from-Shell.html

A bit annoyed the acquisition will be funded by RI given a consiuderable amount of cash was spent nuying back shares much higher up.

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	Isaac	1st Jul '12	670 of 686	2
Oil and gas are the new African queens “In the space of a few years, East Africa has become a feeding ground for most of the world’s oil majors, which have sniffed our resources of oil and gas on a truly gargantuan scale,” wrote Malcolm Graham-Wood, oil analyst at VSA Capital, in a recent note. And in the world of oil and gas where, as he puts it, “if you find it, they will come”, those gargantuan reserves are the key. “It’s been known there’s oil here for 100 years,” Laurie Hunter, chief executive of explorer Madagascar Oil says. “It actually seeps out on the surface in places.” http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/9368387/Oil-and-gas-are-the-new-African-queens.html This is an interesting read : Imagine what could happen in Tajikstan if Tethy's (TPL) strike next year. The majors are not interested at the moment, but they will be if their is a big strike of HC, TPL own the most prolific acreage in the area.
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1st Jul '12

670 of 686

Oil and gas are the new African queens

“In the space of a few years, East Africa has become a feeding ground for most of the world’s oil majors, which have sniffed our resources of oil and gas on a truly gargantuan scale,” wrote Malcolm Graham-Wood, oil analyst at VSA Capital, in a recent note. And in the world of oil and gas where, as he puts it, “if you find it, they will come”, those gargantuan reserves are the key.

“It’s been known there’s oil here for 100 years,” Laurie Hunter, chief executive of explorer Madagascar Oil says. “It actually seeps out on the surface in places.”

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/9368387/Oil-and-gas-are-the-new-African-queens.html

This is an interesting read :

Imagine what could happen in Tajikstan if Tethy's (TPL) strike next year. The majors are not interested at the moment, but they will be if their is a big strike of HC, TPL own the most prolific acreage in the area.

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	Isaac	1st Jul '12	671 of 686	2
More details on the Heritage acqusition http://www.heritageoilplc.com/resource/p3t305g7lkzeq6s4z53jm9jt.pdf
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	davjo	1st Jul '12	672 of 686	3
The deal will be funded through a $550m bridge finance loan from Standard Bank, and a subsequent $370m rights issue. Well that's a bit of a joke, given HOIL have over the last year bought back over 10% of the company at double the current SP. Nonetheless, this does look an interesting acquisition...at least until the Circular reveals who is paying for what exactly. I wonder if HOIL have had the nod over the Uganda arbitration in their favour? That would go down exceedingly well if so!
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	emptyend	6th Jul '12	673 of 686	6
In reply to emptyend, post #664 Very interesting piece here in Businessweek, especially for holders of Cove Energy (LON:COV) Traders are more convinced than ever that a bidding war for Cove Energy Plc (COV) will lead to the richest takeover premium on record for an oil and natural-gas explorer. Of course this comment is glossing over the fact that Cove have made some fresh large discoveries whilst the process has been under way. The article goes on to give various guesses on price and the way the bid will develop from here - numbers up to 330p (132% premium) are suggested. From memory, the highest premium I can recall for an E&P in the last 15 years was about 8 years ago when a smallish Norwegian explorer went for a premium of just over 140%. Can't recall the name - but the details are buried on TMF somewhere. Of note, re the scale of the Cove Energy (LON:COV) assets is this comment: While Cove has yet to generate revenue, the London-based company owns an 8.5 percent stake in Mozambique’s Rovuma Area 1, where recoverable natural gas amounting to more than six times the U.K.’s existing reserves has been discovered. ......and of course next door offshore ENI's block holds a similar amount. I think the next move(s) can be expected in the next week or so. ee
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6th Jul '12

673 of 686

In reply to emptyend, post #664

Very interesting piece here in Businessweek, especially for holders of Cove Energy (LON:COV)

Traders are more convinced than ever that a bidding war for Cove Energy Plc (COV) will lead to the richest takeover premium on record for an oil and natural-gas explorer.

Of course this comment is glossing over the fact that Cove have made some fresh large discoveries whilst the process has been under way. The article goes on to give various guesses on price and the way the bid will develop from here - numbers up to 330p (132% premium) are suggested.

From memory, the highest premium I can recall for an E&P in the last 15 years was about 8 years ago when a smallish Norwegian explorer went for a premium of just over 140%. Can't recall the name - but the details are buried on TMF somewhere.

Of note, re the scale of the Cove Energy (LON:COV) assets is this comment:

While Cove has yet to generate revenue, the London-based company owns an 8.5 percent stake in Mozambique’s Rovuma Area 1, where recoverable natural gas amounting to more than six times the U.K.’s existing reserves has been discovered.

......and of course next door offshore ENI's block holds a similar amount.

I think the next move(s) can be expected in the next week or so.

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	StrollingMolby	7th Jul '12	674 of 686	2
In reply to emptyend, post #673 From memory, the highest premium I can recall for an E&P in the last 15 years was about 8 years ago when a smallish Norwegian explorer went for a premium of just over 140%. Can't recall the name - but the details are buried on TMF somewhere. Is this the one you were thinking of? http://boards.fool.co.uk/revus-was-taken-out-by-wintershall-yesterday-for-a-11290301.aspx 28/10/08 - German oil and gas company Wintershall has agreed to buy Norway's Revus Energy for $740 million in a bid at a premium of 145 percent to Revus' closing price on Friday, the companies said on Monday.
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7th Jul '12

674 of 686

In reply to emptyend, post #673

From memory, the highest premium I can recall for an E&P in the last 15 years was about 8 years ago when a smallish Norwegian explorer went for a premium of just over 140%. Can't recall the name - but the details are buried on TMF somewhere.

Is this the one you were thinking of?

http://boards.fool.co.uk/revus-was-taken-out-by-wintershall-yesterday-for-a-11290301.aspx

28/10/08 - German oil and gas company Wintershall has agreed to buy Norway's Revus Energy for $740 million in a bid at a premium of 145 percent to Revus' closing price on Friday, the companies said on Monday.

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	StrollingMolby	7th Jul '12	675 of 686
Doh! Just noticed you said eight years ago - though similar bid premium to Revus above...
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	emptyend	8th Jul '12	676 of 686
In reply to StrollingMolby, post #674 Yes that was one - I'd misremembered the timing. Worked out well for Wintershall too....
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8th Jul '12

676 of 686

In reply to StrollingMolby, post #674

Yes that was one - I'd misremembered the timing. Worked out well for Wintershall too....

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	fuiseog	12th Jul '12	677 of 686	2
Premier 60% farm-in to Rockhoppers Falklands licence. http://www.investegate.co.uk/Article.aspx?id=201207120700024838H
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	REO100	13th Jul '12	678 of 686
As ee highlighted earlier, looks like it might get interesting at Cove Energy - auction time. http://www.investegate.co.uk/Article.aspx?id=201207130700045841H Reo
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	emptyend	16th Jul '12	679 of 686	2
Alphaville today: BE ….. Have we fired off the raw warning already? BE Yes. It appears we have. TT fire aagain BE Well. This is saw raw it’s barely even carpaccio ….. BE But there’s been some talk in recent days of an Asia to Europe bid. BE Of decent size. £1bn or ballpark. TT anything specific BE No. That’s the problem. People thinking commodities. BE For oil in that kind of size, there are only a few potential targets in the UK at least. TT do you think this firm..or just somethjing that could have been said anytime in the last six months BE I think this is firm. Not just waffle. I’d not be surprised to see something in the next few days. BE And that makes me very nervous about Salamander. BE Which has been strong for some time, for no obvious reason. Salamander Energy PLC (SMDR:LSE): Last: 191.50, up 12.4 (+6.92%), High: 192.30, Low: 178.00, Volume: 232.25k BE To be clear, I don’t know if it’s a target. But it could be. It fits the bill. BE As I say, that’s not raw. It’s just typing really, and I’m not sure I want to type much more. ....eventually they will find a more obvious candidate, I guess - though perhaps not if they limit their thoughts to £1bn? Thats what can happen when you put words into your source's mouth, I imagine ;-) ee
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16th Jul '12

679 of 686

Alphaville today:

BE
….. Have we fired off the raw warning already?

BE
Yes. It appears we have.

TT
fire aagain

BE
Well. This is saw raw it’s barely even carpaccio …..

BE
But there’s been some talk in recent days of an Asia to Europe bid.

BE
Of decent size. £1bn or ballpark.

TT
anything specific

BE
No. That’s the problem. People thinking commodities.

BE
For oil in that kind of size, there are only a few potential targets in the UK at least.

TT
do you think this firm..or just somethjing that could have been said anytime in the last six months

BE
I think this is firm. Not just waffle. I’d not be surprised to see something in the next few days.

BE
And that makes me very nervous about Salamander.

BE
Which has been strong for some time, for no obvious reason.

Salamander Energy PLC (SMDR:LSE): Last: 191.50, up 12.4 (+6.92%), High: 192.30, Low: 178.00, Volume: 232.25k

BE
To be clear, I don’t know if it’s a target. But it could be. It fits the bill.

BE
As I say, that’s not raw. It’s just typing really, and I’m not sure I want to type much more.

....eventually they will find a more obvious candidate, I guess - though perhaps not if they limit their thoughts to £1bn?

Thats what can happen when you put words into your source's mouth, I imagine ;-)

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	emptyend	16th Jul '12	680 of 686	1
Now that Royal Dutch Shell (LON:RDSA) have dropped out of the bidding for Cove Energy (LON:COV) (presumably handing PTTEP a free run), it will be interesting to see what they do next. I doubt we have long to wait to find out. One presumes that they must have other irons in the fire (perhaps taking some of Anadarko's stake or some of ENI's in the other Moz block?)......they were never going to stop at Cove Energy (LON:COV) 's 8.5% anyway and paying up would probably have moved the price against them in relation to a larger deal with one of the others. ee
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16th Jul '12

680 of 686

Now that Royal Dutch Shell (LON:RDSA) have dropped out of the bidding for Cove Energy (LON:COV) (presumably handing PTTEP a free run), it will be interesting to see what they do next. I doubt we have long to wait to find out.

One presumes that they must have other irons in the fire (perhaps taking some of Anadarko's stake or some of ENI's in the other Moz block?)......they were never going to stop at Cove Energy (LON:COV) 's 8.5% anyway and paying up would probably have moved the price against them in relation to a larger deal with one of the others.

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	Isaac	16th Jul '12	681 of 686
....eventually they will find a more obvious candidate, Well it makesa nice change that we are pumping Oil in a rising Oil price environment.....Poo is up almost $2 today....:-)
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16th Jul '12

681 of 686

....eventually they will find a more obvious candidate,

Well it makesa nice change that we are pumping Oil in a rising Oil price environment.....Poo is up almost $2 today....:-)

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	Fangorn	23rd Jul '12	682 of 686
http://www.cnoocltd.com/encnoocltd/newszx/news/2012/2062.shtml CNOOC Limited Enters Into Definitive Agreement to Acquire Nexen Inc @ US$27.50, a 61% premium
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	jseth123	9th Oct '12	683 of 686	2
Ithaca Energy Inc. announces that it has entered into agreements with Noble Energy Capital Limited (a subsidiary of Noble Energy Inc., NYSE: NBL) to acquire two wholly owned UK subsidiary companies that will hold non-operated interests in UK North Sea producing fields; a 12.885% interest in the Cook field and a 14% interest in the MacCulloch field. o The two fields are anticipated to increase the Company's net proven and probable reserves by 3.4 million barrels of oil equivalent ("mmboe"), based on the effective date of the transactions of 1 January 2012. o The total consideration is US$38.5 million, implying an acquisition cost of US$11.3 per barrel of proven and probable reserves. Another reference point for producing North Sea transactions, although the fields are well into decline from what I understand. Link: Ithaca Energy - Acquisition of Non-Operated Interests (investegate)
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9th Oct '12

683 of 686

Ithaca Energy Inc. announces that it has entered into agreements with Noble Energy Capital Limited (a subsidiary of Noble Energy Inc., NYSE: NBL) to acquire two wholly owned UK subsidiary companies that will hold non-operated interests in UK North Sea producing fields; a 12.885% interest in the Cook field and a 14% interest in the MacCulloch field.

o The two fields are anticipated to increase the Company's net proven and probable reserves by 3.4 million barrels of oil equivalent ("mmboe"), based on the effective date of the transactions of 1 January 2012.
o The total consideration is US$38.5 million, implying an acquisition cost of US$11.3 per barrel of proven and probable reserves.

Another reference point for producing North Sea transactions, although the fields are well into decline from what I understand.

Link: Ithaca Energy - Acquisition of Non-Operated Interests (investegate)

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	flyinghorse	15th Oct '12	684 of 686	1
Bayfield reverse takover by Trinity E&P http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11362778
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	fuiseog	24th Oct '12	685 of 686	1
No Progress here - Canada blocks Petronas offer for Canadian gas firm Progress Energy http://www.theglobeandmail.com/globe-investor/ottawa-keeps-malaysias-petronas-out-of-canadas-oil-patch/article4626063/
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	passinthru	12th Jan	686 of 686	2
Will this be the year BG Group is snapped up! Jan 11 (Reuters) - The climate is right for a repeat of the oil company takeover bonanza that began when Britain's BP pounced on United States-based Amoco in 1998, according to a research note by analysts at Bernstein. http://www.reuters.com/article/2013/01/11/energy-ma-idUSL5E9CBBG220130111 passinthru
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12th Jan

686 of 686

Will this be the year BG Group is snapped up!

Jan 11 (Reuters) - The climate is right for a repeat of the oil company takeover bonanza that began when Britain's BP pounced on United States-based Amoco in 1998, according to a research note by analysts at Bernstein.

http://www.reuters.com/article/2013/01/11/energy-ma-idUSL5E9CBBG220130111

passinthru

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