THE battle for Faroe Petroleum intensified yesterday when the Norwegian player behind a hostile takeover bid for the Aberdeen-based oil and gas firm ramped up efforts to convince shareholders to accept the deal.
Aberdeen-based Faroe has dismissed DNO’s 152p-a-share bid as “entirely opportunistic”, declaring it fundamentally undervalues the company. The bid values Faroe at around £607.9 million.
But in a fresh offensive DNO urged shareholders to consider a series of
questions before deciding whether to accept the offer before January 2. DNO said it would have the choice to lapse the offer or extend it if it does not receive sufficient acceptances for its offer to be unconditional.
DNO, which holds a 29.9 per cent stake in Faroe, called on the company to publish a “robust valuation” report to support claims it is worth more than 152p per share. It questioned why the production of first oil from the Brasse field has been delayed. And it asked why Faroe has called on DNO to revise its offer in light of benefits brought by the asset swap with Equinor when the Aberdeen firm said the deal was value neutral.
But Faroe said there is “nothing substantially new” in the DNO statement while repeating the offer “substantially undervalues” the business. It noted that DNO continues to seek to justify its offer based on the Faroe share price of April 3, which fails to take account of the recent Iris/Hades and Agar discoveries, and the asset swap deal agreed with Equinor of Norway. Faroe said it has commissioned an independent valuation of its assets, which would include the latest Brasse East drilling results.
Meanwhile, Faroe said yesterday that the results from drilling on the Cassidy exploration well in the Norwegian North Sea had been “disappointing”. The well will now be plugged and abandoned.
Chief executive Graham Stewart said: "Whilst the result of the Cassidy well is disappointing, Faroe has maintained its above average exploration success rate in 2018 with two commercial discoveries out of four wells so far this year: Iris Hades in Norway (Faroe's largest discovery to date); and Agar in the UK.
"We remain active over the coming months, with the Brasse East well currently drilling, and a further three exploration and appraisal wells so far committed for drilling in H1 2019.”
Shares in Faroe closed down 2.8p, or 1.8%, at 149.2p.
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