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Maurel CEO Says Oil Explorer Is Too Small to Go It Alone

Etablissements Maurel & Prom, a French oil explorer, isn’t big enough to remain independent, according to Chief Executive Officer Jean-Francois Henin.

“We are open to an operation that could give a better future to the company and our shareholders,” he said on a conference call today. “We would have to increase the growth rate in coming years or marry with someone because our size doesn’t give us the capacity to remain independent for long.”

Partnering with another company or being acquired would allow development of oil and natural-gas projects, he said, denying any offer was received from Royal Dutch Shell Plc.

Henin, who owns 24 percent of the company, has long said he would consider a good offer for Maurel, which last year decided to spin off its Nigerian operation to concentrate on projects in Gabon, Tanzania and Colombia. Asked how soon the company needs to find a solution, he replied from “yesterday.”

Maurel had been in talks with India Oil Corp. “on and off” for years and had failed to attract a reasonable offer for the entire company, Henin said. Maurel also considered a listing in London, he said.

“Our size is not sufficient” to generate cash flow for development, Henin said today. “We have looked at many things but haven’t found so far what could work.”

Maurel has been “working seriously on this subject for 18 months” and wouldn’t“just do anything,” he said. One option could also be a “modest” investment that could give “a significant upside.”

Profit Decline

The company, which in 2007 sold Congolese fields to Eni SpA, has drawn interest from potential bidders including Chinese companies, two people with direct knowledge of the matter said last year.

Maurel today reported a 64 percent drop in first-half profit after year-ago asset sales weren’t repeated. Net income retreated to 32 million euros ($40 million), from 90 million euros last year, the Paris-based company said in a statement. Its share of output was 14,500 barrels of oil equivalent a day.

Maurel kept a production target of 24,500 barrels of oil equivalent a day by end 2012 and said an incident at the Omoc-Nord field in Gabon being ramped up would hurt output through the end of next month.

Maurel said it has provisioned 12.5 million euros against the sale of a unit in Venezuela because of uncertainty about payment from acquirer Integra. This follows a provision of 25 million euros earlier this year.

The French explorer failed to find commercial reserves after drilling in the Mnazi Bay concession in Tanzania although it said today “significant potential” exists on the permit.

Maurel fell 1.4 percent to 12.37 euros as of 1:20 p.m. in Paris. The shares are up 2 percent in the past year.

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