LONDON (Alliance News) - Ophir Energy PLC has rejected a possible offer from Indonesia's PT Medco Energi Internasional Tbk, the company said Monday, at a price below what was proposed in October.
The rejected proposal is at 48.5 pence a share, with Ophir saying it "undervalues" the company at around GBP343 million. Ophir shares were trading at 44.80p each on Monday morning, down 0.4%.
Ophir's current price suggests a market capitalisation of GBP317.4 million.
Ophir's shares are 26% higher over the past 30 days, and up 6.7% in the past three months, but are significantly lower, 38%, than they were a year ago.
Ophir, which is due to give an operations update Tuesday, said on Friday PT Medco had made an "unsolicited" approach in October at 58.0p, before then making a revised proposal of 53.8p in December.
The drop in the proposal price came after a lack of progress on due diligence on one of Ophir's assets and a fall in the price of oil.
Brent was quoted at USD59.52 a barrel on Monday, and is down 26% over the past three months on oversupply concerns.
"The management's rejection of the Medco offer comes at a difficult time, as it brings in to sharp relief the difference between value and worth," said SP Angel.
"We would support the management's position the Medco offer doesn't reflect the value of the asset base, but there will need to be a Herculean effort in the wake of licence "R's" loss to convince the company's owners this the management team to unlock it."
"Consequently, the question becomes one of how that value will be realised, as while value is created at the drillbit, worth is realised by the conversion of that value into cash," the broker added.
On Monday last week, Ophir said the Ministry of Mines & Hydrocarbons of Equatorial Guinea had not extended its Block R licence, which expired at the end of 2018. This block contains the Fortuna gas discovery.
Ophir is expecting a USD300 million impairment of the asset, and said at the time it was "disappointed" by the Ministry's decision.
Jakarta-listed PT Medco has oil and gas assets in Indonesia and abroad, as well as copper and gold mining sites in Indonesia.
It also has coal interests in Indonesia's North Kalimantan province, a gas distribution and trading business, and a power company.
PT Medco has six producing blocks in Indonesia: Lematang, South & Central Sumatera, Rimau, South Natuna, Tarakan, and Senoro-Toili.
In 2017, the company produced 86,800 barrels of oil equivalent per day, a figure 31% higher year-on-year due to strong performance at its South Natuna and Senoro assets.
By comparison, Ophir's production in 2017 averaged 11,700 barrels of oil equivalent per day.
PT Medco posted revenue of USD925.6 million in 2017, well higher than the USD590.0 million it generated in 2016. Gross profit was USD420.7 million, from USD249.4 million a year prior.
Ophir's 2017 revenue was USD188.5 million, up from USD107.2 million year-on-year, and gross profit was USD41.0 million versus USD11.7 million.
Ophir's production comes from assets in Thailand, Vietnam, and Indonesia. It also has exploration assets Myanmar, Mexico, Indonesia, and Malaysia.
For 2018, Ophir has guided for total production to be at 27,500 barrels of oil equivalent per day compared to PT Medco's guidance of 85,000 barrels of oil a day.