ABERDEEN-based Faroe Petroleum has ramped up its efforts to ward off a hostile takeover bid from Norwegian company DNO, declaring the offer is “entirely opportunistic” and that the terms fundamentally undervalue it.
Publishing a detailed response to the bid yesterday, it also argued that DNO’s unsolicited offer “ignores Faroe management’s proven track record and its exciting independent future”. DNO has a 29.9% stake in Faroe.
John Bentley, non-executive chairman of Faroe, said: “We have one of the best exploration track records on the Norwegian Continental Shelf and are currently in the midst of the largest drilling campaign in Faroe’s history. We are fully funded to deliver our 35,000 boepd (barrels of oil equivalent per day) production target in the near-to-medium term and are confident in our ability to deliver in excess of 50,000 boepd in the medium term.”
DNO’s 152p-a-share cash bid, which values Faroe at around £607.9 million, was unveiled in late November. It followed a sharp fall in oil prices.
Jack Allardyce and Ashley Kelty, oil and gas research analysts at Cantor Fitzgerald Europe, said: “We find little fault in management’s arguments, and despite recent weakness in oil markets we continue to believe that shareholders should receive far better value for one of the sector’s most respected names. We maintain our “buy” recommendation and 195p target price.”
They declared the level of the DNO bid “ignores FPM’s (Faroe Petroleum’s) reputation as one of the best explorers on the NCS (Norwegian Continental Shelf), as per a new report published by Wittemann E&P Consulting”.
Shares in Faroe fell 1p to 151.2p yesterday.
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