Cobalt Jumps Most Since 2012 on Talk of Buyout, Angola Sale

  • Deal to sell Angola drilling rights to Sonangol fell through
  • Cobalt could get interest from integrated oil cos.: analyst

Offshore oil explorer Cobalt International Energy Inc. jumped the most in four years after an analyst upgraded the stock and said it could be a takeover target for bigger drillers.

Shares in the Houston-based company climbed as much as 42 percent, the biggest intraday increase since February 2012, and were 24 percent higher at $1.30 as of 2:25 p.m. in New York. The stock had fallen 81 percent for the year before Wednesday.

While a $1.75 billion deal to sell drilling rights off of Angola fell through earlier this month, Cobalt should be able to find another buyer at close to that price in “quick order," analyst Anish Kapadia of Tudor Pickering Holt & Co. said in a research note Thursday. With combined reserves of 1.1 billion barrels off of Angola and the U.S. Gulf Coast, the company could attract interest from bigger integrated oil companies with perhaps a 50 percent premium over the current share price, he wrote. That would value the company at $652.4 million at Wednesday’s closing price.

“We are increasingly confident in the current market that it can get a deal done on Angola or that it will be taken out by a major," Kapadia wrote. “We have seen a recent pick-up in asset deals internationally and although prices have been low, it shows that the market is open, in contrast to what we saw in 2015."

Tudor Pickering upgraded the shares to buy from hold.

Cobalt said on Aug. 2 that its year-long effort to sell the Africa assets to Angolan state-owned oil company Sonangol was off. Cobalt will market the property to other buyers and still thinks it can close a deal this year, Chief Executive Officer Tim Cutt told analysts on a conference call that day.

Lynne Hackedorn, a Cobalt spokeswoman, declined to comment on the analyst’s note when reached by telephone Thursday. Cobalt has opened a “data room" where would-be buyers can assess information on the Angola property, she said.

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