Tuesday, July 5, 2011

List of E&P Companies for Sale/ Looking at Strategic Alternatives in 2011

“Strategic alternatives may include, but are not limited to, a sale of the corporation, a merger or other business combination, a farmin or farmout, an acquisition or disposition of assets, among other alternatives"

In 2011, 26 companies were looking for strategic alternatives and so far only 4 of these deals have been completed! From the Derrick ‘Deals in Play’ database, 21 companies are looking to sell or are considering strategic alternatives. Opportunities involving Canadian companies represent ~ $1 billion with more than 33 MMBOE of proved reserves and ~ 17 MBOE/d of production

The tables below show these companies along with their reserves and production profiles. Subscribers to Derrick’s database can get detailed information on each deal by clicking the bars (login required).

Chart 1: Canadian companies that are up for sale or considering strategic alternatives. Companies have been sorted by deal value. Hover over colored squares for more information. Subscribers can click on the squares for a detailed deal breakdown (login required). Source, Derrick E&P Transactions Database.

Chart 2: Global companies that are up for sale or considering strategic alternatives. companies have been sorted by deal value. Hover over colored squares for more information. Subscribers can click on the squares for a detailed deal breakdown (login required). * Maurel&Prom's principal assets are in Gabon. However they also have assets in other countries. But for this discussion Gabon is given as principal country. Source, Derrick E&P Transactions Database.

Analyst comments:
1. Most of these companies are private.
2. By far, the biggest deal here is Exco Resources which is looking at strategic alternatives, not excluding the possibility of putting up the company for sale. Derrick's analysts place the deal value in the range of $1 - $10 billion.
3. Most companies that have been put up for sale and/ or considering strategic alternatives  so far are Canadian (62%). Every other country is only represented once (either for sale or considering other strategic alternatives). 

4. In 1H 2010, 18 companies were put up for sale and most them have been sold. In the corresponding time in 2011 (1H 2011), 26 companies have been put up for sale. This is an increase in corporate sales by 44%. Apart from other factors, this also likely reflects higher oil prices. 

DNO adds RAK’s MENA assets to its portfolio. Looks to expand in Norway and Tunisia

DNO International ASA and UAE-based RAK Petroleum Public Company Limited have agreed to merge RAK Petroleum’s Middle East and North Africa operating subsidiaries into a subsidiary of DNO in exchange for DNO shares to be issued to RAK Petroleum. The consideration shares will be issued at a minimum share price of NOK 8.25 per share and a maximum share price of NOK 10.00 against a value of the RAK Petroleum MENA assets between US$250 and 300 million.

DNO- Going in for additional listing
DNO’s board of directors has confirmed the intention to list the enlarged company on the London Stock Exchange in addition to the Oslo listing. A listing in London is expected to contribute to extended coverage of the company’s shares, attract interest from a broader range of MENA focused investors and provide a solid platform for follow on merger and acquisition activity. It is expected that, on transaction closing, RAK Petroleum will hold a total ownership interest in DNO of approximately 40%. RAK Petroleum currently holds a 30% share in DNO.

Overview of RAK Petroleum 
RAK Petroleum is the operator of seven blocks in the Sultanate of Oman (Blocks 8, 30, 31, 47) and the United Arab Emirates (RAK B, RAK Saleh and RAK onshore) and also owns a non-operating 30% interest in the Hammamet offshore license in the Republic of Tunisia. The reserves and production of RAK's MENA assets, as of Q1-2011were:
-- WI Reserves: 33.5 MMBOE (40-45% oil and liquids)
-- WI production: 7,510 BOE/d (60-65% oil and liquids)
-- Contingent Resources: 32 MMBOE (40% oil and liquids).

The combined entity will have a combined production of 47,455 BOE/d and reserves of about 326.5 MMBOE.

DNO looking for new options
This acquisition is in line with DNO's 2011 strategy of acquiring assets in MENA area and form atleast one new core area of operations.

The Chairman of DNO, Mr Mossavar-Rahmani, said “DNO plans to refocus itself as a Middle East exploration and production company, shutting down its business in Mozambique and unloading assets in Equatorial Guinea”. It is now evaluating expansions into its home base of Norway, and in Tunisia, where RAK Petroleum holds a 30% interest in an offshore licence.

Mr Mossavar also said, “A number of oil companies had called him "to consider combining" as political turmoil sweeps the Middle East and pushes down share prices. There may be an opportunity for a company like DNO in its enlarged form to take the lead in aggregating other MENA focused companies whose share prices have been hit by the perception of increased risk”.

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