THE process of consolidation among North Sea players continues with Ithaca Energy set to acquire Valiant Petroleum in a £203 million deal that values founder Peter Buchanan's stake at £15m.
Aberdeen-based Ithaca announced it has agreed the terms for a cash and shares takeover with the board of Valiant, which Mr Buchanan founded after working in the oil and gas team at Royal Bank of Scotland.
In November Valiant appointed Michael Bonte-Friedheim as acting chief executive to allow Mr Buchanan to focus on a buyout proposal.
Kevin Lyon, fomer head of the old central Scotland office of the 3i private equity business, who chairs Valiant, has a holding valued at £380,000 by the proposed deal with Ithaca.
Canada-incorporated Ithaca said the proposed acquisition would establish the company as a leading mid cap North Sea oil and gas operator. The company expects to double current forecast 2013 production to 14,000-16,000 barrels oil equivalent daily.
In September Valiant put itself self up for sale after suffering exploration reverses and finding the costs of a key development project spiralling.
Experts predicted other North Sea focused companies would follow its lead. Some small firms have experienced problems accessing finance to fund work on the acreage they hold.
Ian McLelland, analyst at Edison Investment Research, said: "Ithaca's full price offer for Valiant smacks of being a defensive move to fend off unwanted approaches in what remains an extremely active North Sea M&A market."
However, he added: "The deal is hardly great news for the long-suffering Valiant shareholders, either, who get no premium to the market price when it launched its strategic review."
Shares in Valiant closed at 480p on September 6, when the company announced it had started a strategic review in which the sale of the business would be considered. Ithaca said the proposed takeover valued them at around 475p.
Subject to approval of the deal by Valiant shareholders and the relevant court, Ithaca will acquire an extensive portfolio of assets in UK and Norwegian waters.
Valiant produced an average 4800 bopd in the six months to June, compared with 8225 bopd in the same period of 2011.
Ithaca will also acquire $500m (£332) tax losses to offset against North Sea profits.
Two Valiant directors, Jannik Lindbæk and Mr Bonte-Friedheim, will be appointed non-executive directors of Ithaca Energy.
Ithaca said Valiant directors, except Mr Buchanan, had irrevocably undertaken to approve the acquisition in respect of their own beneficial holdings.
Valiant Shareholders will be entitled to receive 307p in cash and 1.33 Ithaca consideration shares for each Valiant share held. Shares in Valiant Petroleum closed up 31% at 455.5p.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article