LONDON (Alliance News) - Shares in Ophir Energy PLC surged on Wednesday after confirming it has received a takeover offer from Indonesia's PT Medco Energi Internasional Tbk.
Shares in the Africa and Asia-focused oil and gas company jumped 34% at 47.86 pence on Wednesday morning, giving a market capitalisation of GBP338.2 million. During 2018, Ophir shares had lost 48% of their value, ending the year with a market cap of GBP252 million.
Shares in Medco Energy closed up 5.8% in Jakarta on Wednesday at IDR720 each, about 0.04 pence, giving it a market cap of IDR12.84 trillion, about GBP700 million.
Ophir said that it and Medco are in discussions about a cash offer, and that there could be "no certainty" that a firm offer will be made. They provided no details about the offer being discussed.
Medco Energi has until January 28 to make a firm offer to wholly acquire Ophir Energy.
For 2018, Ophir expects its pro-forma total production to be 27,500 barrels of oil equivalent per day. On an actual basis, production is expected to be 17,000 barrels of oil equivalent per day.
Medco's 2018 production guidance stands at 85,000 barrels of oil equivalent per day, according to its website, implying that should the acquisition go through, the takeover could increase Medco's production to around 110,000 boepd.
Although shares have risen on optimism over the deal, broker AJ Bell took a cautious stance on the news.
"Oil exploration can be an unforgiving activity and with Ophir Energy trading at just a fraction of the market value it enjoyed in the early 2010s it is perhaps unsurprising a potential cash bid has emerged for the company. How generous its Indonesian suitor Medco is prepared to be is open to question. With oil prices still volatile, any deal could flounder over a lack of agreement on what represents a fair value for the business," said Investment Director Russ Mould.
"A pivot towards producing assets in South East Asia has been only partly successful and, should a firm takeover offer materialise, long-suffering shareholders may welcome an opportunity to realise some value from their investment," Mould added.
Medco Energi is a Southeast Asia focused energy company, focused on oil and gas production, but also has copper, gold and coal mining assets in Indonesia.
In Indonesia, Medco operates gas, geothermal and hydro power plants through an 88% holding in Medco Power, and has a 39% stake in the Batu Hijau copper and gold mine in Nusa Tenggara.
Although the company is based in Indonesia, PT Medco has holdings in several operations in the US, Tunisia, Libya, Yemen and Oman.
In Indonesia, Ophir Energy holds a 68% operating interest in the Madura offshore production sharing contract, as well as a 45% interest in the Sampang PSC and a major holding in the Bangkanai PSC.
In early December, Ophir said a gas discovery was made by the Paus Biru-1 well within Sampang. The Paus Biru-1 exploration well was drilled to a total measured depth of 710 metres and encountered an estimated 29 metres of net pay within its target reservoir.
Ophir also has operations in Myanmar and Malaysia, as well as Tanzania and Equatorial Guinea in Africa.
On Monday, Ophir had said it is waiting for a response from the Equatorial Guinea Ministry of Mines & Hydrocarbons over a request for an extension of the Block R licence. The licence covers the oil and gas company's Fortuna floating natural gas development in the country, and was due to expire following the end of 2018.
