- Explorer attracts interest from companies, financial investors
- Shares surge up to 13 percent, biggest gain in seven months
Ophir Energy Plc, the U.K. oil and gas explorer active in Africa, has received informal takeover and merger interest from several parties as a slump in crude oil prices forces independent operators to consolidate, according to people with knowledge of the matter. The shares rose the most in seven months.
London-listed Ophir, which bought Salamander Energy Plc earlier this year, has attracted interest from both companies and financial investors, the people said, asking not to be identified as the information is private. The company is evaluating the proposals, but deliberations are at an early stage and it may decide against a deal, the people said.
Independent oil explorers have been battered as concerns mount about their ability to withstand the decline in oil prices. Unlike several of its peers, Ophir has low debt levels and net cash of almost $400 million at the end of June as well as assets in Africa and Southeast Asia, which makes it an attractive target for potential buyers or partners, the people said.
“There’s plenty of room for consolidation in the sector,” Brian Gallagher, a London-based analyst at Investec Plc said in an interview. “Pragmatism should win out.”
Ophir shares rose 6.9 percent to 90.40 pence in London trading at 1:37 p.m., giving the company a market value of about 638 million pounds. Earlier, the shares gained as much as 13 percent, the biggest increase since April. Peers also rose with Tullow Oil Plc gaining as much as 7.3 percent, Genel Energy Plc rising as much as 5.3 percent and Premier Oil Plc increasing as much as 6.3 percent.
Ophir shares had fallen 40 percent this year through Tuesday, compared with a 15 percent decline at the 12-member FTSE All-Share Oil & Gas Producers Index. The company completed the sale of a 20 percent stake in three gas blocks in offshore Tanzania for $1.3 billion to a unit of Singapore’s Temasek Holdings Pte last year. The company is also working with banks to help find a partner for its multibillion-dollar liquefied natural gas development in Equatorial Guinea, people familiar with the matter said in July.
Genel Energy, another explorer listed in London, is in early-stage merger talks with New Age African Global Energy Ltd., according to people familiar with the matter.
A representative for Ophir Energy declined to comment.