Maurel Rises on Plan for Caroil Sale, Tuscany Stake Purchase

Etablissements Maurel & Prom SA, a French oil explorer, jumped after announcing a plan to buy a 29 percent stake in Tuscany International Drilling Inc. as part of the Canadian company’s purchase of its rig unit Caroil SAS.

Maurel rose as much as 3.5 percent and was trading 43 cents higher to 16.85 euros at 11:38 a.m. in Paris. The stock has risen about 60 percent since the start of the year.

The agreement is “another clear sign that management is seeking to sell all Maurel and Prom’s assets excluding Nigeria activities,” Kepler Capital Markets analyst Bertrand Hodee wrote in a report today. He has a ‘buy’ rating on the shares and a target price of 21.60 euros.

Maurel and Tuscany, which is based in Calgary, announced today an agreement for Tuscany’s wholly-owned subsidiary Tuscany Rig Leasing to acquire all of Caroil. The deal follows the unveiling last month of a plan by the French explorer to spin off a Nigerian unit that acquired production licenses from Royal Dutch Shell Plc. Maurel is 24 percent owned by Chief Executive Officer Jean-Francois Henin.

Tuscany will pay Maurel $120 million in cash, 82.5 million Tuscany shares and 27.5 million zero cost, non-transferable, non-voting common share purchase warrants, giving Caroil an enterprise value of $202 million. After the sale, Maurel will own about 29 percent of Tuscany.

Caroil and Tuscany will operate in Latin America and Africa, according to statements from the two companies. Caroil owns 13 land-based drilling rigs and operates two workover rigs currently located in Colombia and Congo, Gabon, Cameroon and Tanzania.

Operating Margins

Following the deal, Tuscany, whose fleet will rise to 41, expects run rate revenues of about $350 million and operating margins of about 34 percent, according to the company’s statement.

Following Maurel’s announcement of plans for its Nigerian business, Kepler analyst Hodee said the company was being “groomed for sale.”

Henin told reporters in April he has failed to attract a reasonable offer for the entire company, which has also tried to list in London. The oil company enlisted Citigroup Inc. and BNP Paribas about a year ago to search for partners for exploration permits held by the company, he said.

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