RE: Article from FT2 Aug 2019 14:10
This year started with a flurry of takeover activity in the UK small-cap oil and gas sector and recent interest in London-listed Amerisur Resources suggests the trend is continuing.
In January, Faroe Petroleum, whose assets were focused on the Norwegian North Sea, succumbed to a £640m takeover from DNO of Norway.
That was quickly followed by a £408m deal for south-east Asia-focused Ophir Energy by Indonesia’s Medco Energi.
The target companies shared little in common when it came to their assets. Instead, opportunism has been the defining theme, according to Stephane Foucaud, analyst at GMP FirstEnergy.
With oil prices relatively “solid”, so-called independent oil companies are generating decent levels of cash. But there is a “complete lack of appetite” from general investors to back smaller listed fossil-fuel producers because of climate change and ESG — environmental, social and governance — policies, he said.
There are, therefore, “a lot of bargain deals to be made”, particularly as acquirers can fund bids largely with debt and the target company’s cash.
Amerisur Resources
London-listed Amerisur Resources, whose assets are based mainly in Colombia, said last month it had received interest from external parties and would carry out a strategic review, looking at options including a possible sale.
A few days later, Maurel & Prom (M & P), listed on France’s Euronext exchange, admitted it had made an approach to Amerisur on July 18 about a possible $257m cash and shares takeover.
Amerisur’s board said the 17p-a-share approach “was not at a level, nor in a form, that merited further consideration” and it had held a “number of conversations” with counterparties who had expressed interest in participating in a formal sales process.
Amerisur produced an average of 5,537 barrels of oil per day to the end of June. It is drilling up to 10 wells this year, predominantly in the Llanos basin in central Colombia where most of the country’s oil is produced and where discoveries can be developed quickly and cheaply.
Analysts at RBC Capital Markets have speculated New York-listed Geopark, which has assets neighbouring those of Amerisur in the Llanos basin, would be among the “most credible” candidates for any possible rival offer.
Amerisur’s shares, which were trading at 14.12p a year ago, are now up at 18p.
Independent Oil & Gas
It has been a rough year for Aim-quoted Independent Oil & Gas after it found itself swept up in the scandal surrounding London Capital & Finance (LCF), the collapsed UK investment compan