Norwegian oil and gas operator DNO has issued a revised bid of around £641.7m to take full ownership in Faroe Petroleum.
Currently, DNO holds a stake of 28.22% in Faroe Petroleum. The company said that it is giving a final offer price of 160p per share to acquire the remaining stake of 71.78% in the UK-based oil and gas company.
The revised offer implies a value of around £641.7m for the fully diluted share capital of Faroe Petroleum, which is currently engaged in exploration, appraisal and production activities across Norway and the UK.
In November 2018, the Norwegian oil and gas operator offered 152p in cash to buy the stake it did not own before in the company. DNO then said that it strongly opines that the assets of the UK oil and gas company are better positioned under its control.
A considerable part of Faroe Petroleum’s assets is located in Norway. Faroe Petroleum, in response, at that time, claimed that DNO did not engage with it before its announcement of the unilateral offer.
A month later, the company issued a circular rejecting the offer made by the Norwegian oil and gas operator. Saying that the offer was opportunistic and substantially undervaluing the company, it asked its shareholders not to take any action.
DNO’s first investment in the UK firm was in April 2018 to buy a 15.37% stake from Delek Group. In the same month, the Norwegian firm through other transactions almost doubled its stake.
Faroe Petroleum said that the 152p per share offer from DNO represented a premium of just 1% to the undisturbed three-month volume weighted average share price of 151p as of 23 November 2018.
The company also said that the November 2018 offer from DNO had ignored the considerable benefits generated by its asset swap with Equinor. Last month, the companies signed an exchange deal for assets in the Norwegian Sea and the North Sea region of the Norwegian Continental Shelf (NCS).
Faroe Petroleum expects the asset swap deal to fast track the delivery of its production target by boosting production by about 60% in 2019. Apart from that, the Equinor deal would bring it £96m incremental cash flow in the coming two years to consolidate its balance sheet further, said the UK firm.