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Mergers and Acquisitions (mainly oil sector)

Thursday, May 14 2009 by
35

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.com/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].

ee


Filed Under: Energy, Oil & Gas Producers,

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720 Posts on this Thread show/hide all

emptyend 20th Jul '09 122 of 720

Vitol bidding for Hillsborough Resources at a 43% premium: http://www.reuters.com/article/rbssEnergyNews/idUSBNG35920220090720

...it's a coal miner though!

Dunno how big that deal is, but perhaps someone watching the Canadian market can enlighten us?

ee

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Isaac 20th Jul '09 123 of 720

Vitol Group is a group of trading companies, with its core business in energy, particularly crude oil and oil products. Other Vitol Group trading businesses include natural gas, sugar, non-ferrous metals, coal, chemicals and power.

 

Vitol is one of the largest Oil trading houses in the market FWIW.

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DearLeader 20th Jul '09 124 of 720
1

Quite a small one I'd say.

http://www.marketwire.com/mw/stock.jsp?Ticker=TSX:HLB

cheers

DL

 

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emptyend 20th Jul '09 125 of 720
1

In reply to DearLeader (post #124)

Quite a small one I'd say.

http://www.marketwire.com/mw/stock.jsp?Ticker=TSX:HLB

 

Ta. Twice the size of AEX though ......;-)

cheers

ee

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djpreston 21st Jul '09 126 of 720

In reply to emptyend (post #125)

Vitol is such a complex group that I doubt you could count the people who know what all the plans are on one hand. They are scarily efficient though (the benefit fo being a Swiss private co Id guess).

Fund Management: European Wealth
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ohisay 21st Jul '09 127 of 720
2

Bit more flesh on the recent GPC suggestions and still persistent rumours about Wellstream .

http://www.guardian.co.uk/business/marketforceslive/2009/jul/21/morrisons-j-sainsbury

Another burst of takeover speculation emerged from the oil sector. Gulfsands Petroleum has jumped 8.25p to 185p on unconfirmed talk of a possible 275p a share offer. The company has projects in Syria and the US. Meanwhile Wellstream has added another 10p to 530p as bid speculation refuses to die down, with traders mentioning a possible price of around 600p a share.

 

 

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oilretire 22nd Jul '09 128 of 720
1

Could have posted this in one of three places. M&A, AEX (Tanzania) or started a thread on it's own......but no COV.L to start a thread - interestingly no ADVFN thread either - Is it completely off everyones radar?

http://www.investegate.co.uk/Article.aspx?id=200907220700130588W

'Cove Energy', announces that together with Maurel & Prom ('M&P') (together 'the Option Holders') it has entered into an exclusivity and call option arrangement whereby the Option Holders have been granted the right but not the obligation to purchase certain oil and gas assets in Tanzania and Mozambique from subsidiaries of Artumas Group

 

a 51% participating interest in all petroleum operations other than exploration assets and 63.75% interest in exploration operations in Mnazi Bay, Tanzania; a 34% participating interest in an onshore area of over 15,000 sq km in the Rovuma Delta Mozambique; and

an 8.5% participating interest in an offshore area of over 11,000 sq km in the Rovuma Delta, Mozambique (together the 'Assets').

 

I have not come across Cove before, but note a 'John Craven' is the CEO - is that the same one of PCI(?) fame?? Someone has heard of them though, SP has gone from sub 10p in Feb to ~20p pre open today. Might be worth a bit of a look later.

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emptyend 22nd Jul '09 129 of 720
1

In reply to oilretire (post #128)

interesting.

Cove Energy is a new one on me too but, on looking at their website http://www.cove-energy.com/ , I see that:

a) the company was formerly known as "Lapp Plats" - a name that will be familiar to those who followed WShak's activities elsewhere and

b) the CEO is indeed the John Craven from PCI

c) they have a joint venture relationship with Quantic (who are well known to shareholders of SOCO via Rui De Sousa's connection)

d) they aim to pick up distressed assets in emerging basins in Africa and the Eastern Med (Quantic territory)

There is a corporate presentation here for those who wish to know more:

http://www.cove-energy.com/wp-content/uploads/2009/07/Company_Presentation.pdf ....which includes more detail on Quantic (p8) than I've seen in any other presentation (though there is nothing new).

Those with an interest may care to look at p11 and speculate which "distressed" company is being referred to [nb the language makes it clear that the "example" is a real one, being thinly disguised (due to the reference to "completed" due diligence). Chariot, Dominion and Bowleven all seem to fit the bill to me [edit: though I wrote that before getting to p13, which contains some extremely detailed clues!!!] .......some better than others ;-)

ee

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p3dr036 22nd Jul '09 130 of 720
1

In reply to oilretire (post #128)

I just started one! http://www.advfn.com/cmn/pbb/thread.php3?id=20200859 !

 

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p3dr036 22nd Jul '09 131 of 720

In reply to emptyend (post #129)

A couple of questions -

1. When did John Craven leave Petroceltic? I see he was the CEO in the 2007 Annual Report, but there is no subsequent company announcement on the PCI website that /I can see in 2007/8 or 2009 relating to his leaving the board.

2. What do you think Cove's chances of success are?

p3dr036

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oilretire 22nd Jul '09 132 of 720
1

In reply to emptyend (post #129)

though I wrote that before getting to p13, which contains some extremely detailed clues!!!

Do PLease tell us who you think it is ;-)

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emptyend 22nd Jul '09 133 of 720

In reply to p3dr036 (post #130)

Start a thread on Stockopedia and I might answer/discuss Cove  :-)

I'll moderate any further discussion on Cove in the M&A thread here, unless it relates to M&A.

Re oilretire's post - yes that was my first thought, though I'm not sure it fits any of the finer details.

On other M&A matters, I see that there are more details to the rumours over Gulfsands and Wellstream:

http://www.guardian.co.uk/business/2009/jul/22/nick-fletcher-market-forces-column

Gulfsands Petroleum jumped 6.25p to 183p on unconfirmed talk of a 275p a share offer. The company has projects in Syria and the US. Wellstream, which supplies infrastructure for the oil and gas industry, added another 24p to 544p as bid speculation refuses to die down, with traders mentioning a possible price of 600p-650p a share

ee

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tournesol 22nd Jul '09 134 of 720
1

In reply to p3dr036 (post #131)

The Craven thing was reported in the normal way via RNS

24/2/09  www.investegate.co.uk/Article.aspx?id=200902240700157630N

Mr Craven has stepped down as Chief Executive after five and a half years.

31/3/09  www.investegate.co.uk/Article.aspx?id=200903311631318533P  

Petroceltic confirms that it has today received notice of the resignation of John Craven as a director of the Company. As announced by the Company on 24 February, 2009, Mr Craven recently stepped down as CEO of Petroceltic. 

 

HTH

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marben100 22nd Jul '09 135 of 720
2

In reply to oilretire (post #128)

......but no COV.L to start a thread

It's here: http://www.stockopedia.com/forum/threads/COV The wiki seems to have inherited the Lapp Plats text....

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emptyend 23rd Jul '09 136 of 720
2

It has been suggested on another board that the Breagh purchase largely sates RWE's appetite for acquisitions. This isn't true.

RWE has a stated target of DOUBLING its production of gas and oil by 2012/13. It is clear what this means if you look at  p.198 here....
http://www.rwe.com/web/cms/mediablob/en/108808/data/114404/39053/rwe/investor-relations/events-presentations/factbook/Facts-Figures-2009.pdf

....from which it is clear that they need to add 39mn boe to their annual rate of production....which is equivalent to about 107,000 boepd.

Yes Breagh is probably "significant"....but (at 1.3-1.5mn cubic metres a day) it is still only equivalent to 9,000-9,500 bopd - which is less than 10% of their targetted additions!

They still need to add substantially by 2012 if their target is to be hit.....and that probably requires them to buy at least TWO DNX lookalikes (or make some big finds of their own).

If you look at p200 of the same RWE presentation, it is clear that both the North Sea and the offshore Nile Delta area in Egypt are right at the top of their (organic growth) investment priority list - which surely would make Dana a very good fit indeed when it comes to inorganic growth opportunities?

....not that I want to see DNX taken out anywhere near to current levels, mind!

ee

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marben100 27th Jul '09 137 of 720
2

Might be worth considering another angle to the Centrica takeover... I spoke to TC about it after Dana's AGM. Considering the "fit" between Dana & Ventures licences & Centrica's needs, there could be a deal to swap some Dana gas assets for Venture oil. TC saw this as a distinct possibility.

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oilretire 1st Aug '09 138 of 720
2

One I meant to post from a couple of days back - GDF - yet another utility type co increasing it's upstream business including M&A aspirations

http://business.scotsman.com/energyutilities/GDF-Suez-North-Sea-plans.5501714.jp

FRENCH-owned energy group GDF Suez yesterday announced it was setting up a £6 million UK exploration and production (E&P) operational centre in Aberdeen. The company is also looking at acquisitions in the region.

 

"GDF Suez plans to become an important producer in the UK North Sea and will play a significant role in its future development and longevity."

 

...........further developing the business through organic growth and acquisition, the company said.

 

The United Kingdom continental shelf (UKCS) was a "key growth region" for the group, which has offshore interests in 35 exploration and development blocks across the West of Shetland, Central and Southern North Sea basins. "We operate 15 of these 35 blocks, two of which include the Cygnus and Juliet fields which are significant North Sea discoveries," said Buchan.

"With these fields now approaching development approval, we are positioning ourselves to harness opportunities in the North Sea energy market."

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emptyend 1st Aug '09 139 of 720
1

In reply to oilretire (post #138)

Interesting move. I wonder if those offices will be anywhere near Carden Place.... ;-)

Meanwhile, at the other end of the foodchain.......

Mid-sized Russian oil player Timan Oil said today that businessman Vitaly Belik has taken control of the London-listed company, marking the latest company to be seized for its debts amid the financial crisis.

Belik has amassed a stake of 56.36%, Timan said in a statement, opening the door for him to oust five of its directors at an upcoming shareholders' meeting, where he would now have the majority vote.

http://www.upstreamonline.com/live/article184707.ece

ee

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emptyend 4th Aug '09 140 of 720
1

Bowleven bid rumour (possibly from TOTAL), started by Merrill:

http://www.telegraph.co.uk/finance/markets/marketreport/5973501/Bowleven-mooted-as-takeover-target.html

 

Yeah right.....

ee

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emptyend 5th Aug '09 141 of 720
3

Ugandan press suggesting that Shell may buy HOIL's Uganda assets:

http://www.independent.co.ug/index.php/business/business-news/54-business-news/1423-shell-to-buy-heritage

....makes some sense to me, given the venture with the Turks in Kurdistan!

ee

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