Ophir Energy PLC (LON:OPHR) saw its shares soar on Wednesday after the small-cap oil and gas explorer confirmed it has received a takeover offer from the Indonesian energy company, PT Medco Energi Internasional.
In a brief statement, Ophir – which had a market cap of £252mln at the close on December 31 - said that it and Medco were currently in discussions about a cash offer, but added that there could be "no certainty" that a firm bid will be made. Jakarta-listed Medco has until January 28 to make a firm offer for Ophir.
READ: Ophir Energy to “significantly downsize” presence in London
Ophir, an upstream gas and oil exploration and production company focused on Africa and Asia, holds a 45% participating interest in the Sampang production sharing contract in Indonesia. Early in December, Ophir said gas had been discovered at the Paus Biru-1 exploration well at Sampang.
In mid-morning trading on Wednesday, Ophir shares were 33% higher at 47.55p albeit having lost 48% of their value in 2018.
Potential cash bid ‘unsurprising’
Russ Mould, investment director at AJ Bell commented: “Oil exploration can be an unforgiving activity and with Ophir Energy trading at just a fraction of the market value it enjoyed in the early 2010s it is perhaps unsurprising a potential cash bid has emerged for the company.
“How generous its Indonesian suitor Medco is prepared to be is open to question. With oil prices still volatile, any deal could flounder over a lack of agreement on what represents a fair value for the business.”
He added: “Ophir has strived for years to develop the Fortuna natural gas discovery offshore Equatorial Guinea but hopes of developing the floating liquefied natural gas project have been beset by a lack of funding and a loss of key partners – including industry giant Schlumberger.
“A pivot towards producing assets in South East Asia has been only partly successful and, should a firm takeover offer materialise, long-suffering shareholders may welcome an opportunity to realise some value from their investment.”