Faroe rejects takeover bid and Amerisur secures farm-out
Significant corporate activity in the oil and gas sector despite oil price volatility
The decision of Faroe Petroleum (FPM:AIM) to reject a hostile takeover bid from 28% shareholder DNO (26 Nov) reflects the lack of generosity in the initial 152p cash offer. While this represented a 20% premium to the price at which the shares traded before the bid emerged, it is materially lower than the 170p+ seen as recently as October.
Broker Cantor Fitzgerald comments: ‘In our view DNO has taken advantage of the recent oil price weakness in order to attempt to acquire the company on the cheap’.
Canaccord Genuity analyst Charlie Sharp thinks a rival bid is unlikely given Norwegian firm DNO’s big shareholding. Investors will be watching closely to see if DNO returns with a more generous offer.
Meanwhile, sector peer Amerisur Resources (AMER:AIM) appears to have got a better deal with its $93m farm-out agreement with US firm Occidental (23 Nov).
This should facilitate an acceleration of exploration drilling on Amerisur’s acreage in Colombia, at limited cost to the company, targeting upwards of 650m barrels of oil equivalent. Amerisur chief executive John Wardle has subsequently bought £1m worth of stock.
By Tom Sieber Deputy Editor