--ADDS BROKER COMMENT AND SHARE PRICE--
Empyrean, which has exposure to production via its 3% stake in the Marathon operated Sugarloaf project in the Eagle Fords shale, has hired Macquarie Capital to conduct the formal sale process.
An outright sale is not, however, the only possible outcome under consideration. The company told investors it may also divest a portion of its assets, or may merge with an appropriate third party. City broker Cenkos is acting as the group’s advisor.
Empyrean clarified that it has not received any approach nor is it in discussions with any party at this time regarding the sale of the company.
In a stock market statement, the company said: “The board of Empyrean, which has been focussed on maximising the commerciality of the Sugarloaf asset alongside its experienced major partners and on demonstrating its future upside potential, has now resolved to consider a number of strategic options to allow the company to capitalise on recent, increased levels of corporate activity and industry interest in the region and to maximise value for its shareholders.”
Earlier this month, Empyrean said that total net production increased by 50% year-on-year at its flagship Sugarloaf asset in the year to end-March.
Production rose to 335,305 barrels of oil equivalent (boe) from 223,500 boe in the preceding 12 months.
Since the turn of the year Empyrean’s shares have advanced around 175%, rising from about 7p to currently trade at 17.53p each.
City broker SP Angel, in a note, said: “Over its history, the company has faced significant headwinds, but the recent strength in the share price is in part a reflection of the fact that the management team have rectified some of the perceived weaknesses within the business.
“This, along with the burgeoning interest in the Eagle Ford shale, means that the timing of this announcement is opportune, and makes it more likely that an acceptable price is achieved.
“We do note, however, that the share price is not back at its 5-year highs, and so could still be underwater for some investors, and as such, we concede that ‘acceptability’ is relative.”