Tuesday, July, 07, 2020 09:44:07

Norwegian oil and gas operator DNO has reportedly initiated a hostile bid to buyout Faroe Petroleum, an independent utility company based in UK, for about 608 million pounds ($781 million). The news had pushed the shares of Faroe up by almost a quarter.

Apparently, twenty eight percent of Aberdeen-based Faroe Petroleum is already owned by DNO, which was until now more focused on Iraqi Kurdistan for expansion in the Middle East. The company had returned to the North Sea last year with the goal of growing through acquisitions and other investments.

The price of each share of Faroe had surged by 26 per cent to 158.4 pence after the bid, which is higher than the cash offer price of 152p, while the stock of DNO had jumped by 3 per cent. The Norwegian company stated that the offer it presented signifies a premium of 44.8 per cent over the closing price on April 3, 2018, a day before DNO had started building up its stake.

Bijan Mossavar-Rahmani, Executive Chairman of DNO, mentioned that in the timeframe between the DNO’s first acquisition, that triggered considerable bid speculation, and this offer, the Brent crude prices have plunged by around 13 per cent and oil and equity markets have entered into a phase of great uncertainty.

The company is offering a substantial premium for those shareholders who seek to exit, Mossavar-Rahmani added. Further from the reports, DNO was accused by Faroe for not engaging with it before it made the offer. Faroe Petroleum issued a statement urging its shareholders not to take any action regarding their shares in the company, pending any further announcements.

Graham Stewart, Chief Executive of Faroe was earlier quoted saying that the company prefers to stay independent. Faroe Petroleum anticipates producing about 12,000 to 14,000 barrels per day (bpd) this year, along with developing numerous promising oil prospects in Britain and Norway.