Molopo Energy Ltd. (MPO), an Australian exploration company focusing on projects in Canada and the U.S., will “look aggressively” at buying North American oil and gas assets during the next six months.
Molopo is considering purchases of assets owned by Calgary- based explorers and producers that need funds and have too much debt, Chief Executive Officer Tim Granger said in a phone interview from the Canadian city.
“There is a window of opportunity,” said Granger, who started as CEO at Melbourne-based Molopo on Jan. 3. “In Calgary a bunch of companies have put themselves into a challenging position, and it’s not because their asset base isn’t good. They’ve gotten themselves a little over-leveraged.”
Molopo, which plans to sell its coal-bed methane assets in Australia as it expands in North America, had cash or cash equivalent of A$90.7 million ($94 million) on June 30 and liabilities (MPO) of A$33.8 million. Canada-based oil and gas exploration companies have an average debt to equity ratio of 34 percent compared with 4 percent for their Australia-based rivals, according to data compiled by Bloomberg.
Companies based outside of the U.S. and Canada made offers worth $57 billion for North American oil and gas exploration and production companies last year, the most in at least 12 years, according to data compiled by Bloomberg. The average premium was 37 percent, the data showed.
Molopo (MPO) last year increased its exploration holdings in the Permian Basin of Texas and added to its position in the Bakken shale formation in Saskatchewan. Its shares fell 0.8 percent to 61 Australian cents in Sydney, valuing it at A$150 million.
The company is also studying selling shares in North America, potentially Toronto, Granger said yesterday, declining to give a timeline or to identify any acquisition targets.
“The board doesn’t believe the assets are getting proper representation with just an Australian listing,” according to Granger, who was previously the chief executive officer of Calgary-based Compton Petroleum Corp.
Molopo expects to complete negotiations over the potential sale of its Queensland assets in the first quarter of 2012, the company said last month.
“We have buyers who are interested and are spending time and effort to look at the Queensland assets,” Granger said. “We’re doing our own math to make sure that whatever number they put forward meets our objective.”
Granger was hired to replace Ian Gorman as CEO after the board determined that Molopo should focus on North America to align with the location of its major assets, the company said Nov. 29.
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