ITALY: Eni Offers 1.5 Billion Pounds to Buy Burren Energy

Eni SpA, Italy's biggest oil company, offered to buy Burren Energy Plc for about 1.5 billion pounds ($3 billion) in cash to add production in Congo and Turkmenistan. Eni proposed paying 1,050 pence for each Burren share, the Rome-based company said today in a statement. Shares of Burren, which rejected the offer and said it has received more than one approach, climbed as much as 29 percent to a record 1,185 pence, suggesting investors anticipate a higher bid will be made for the London-based oil explorer. Eni this year has agreed to pay about $10 billion for oil and gas deposits in the Gulf of Mexico, Africa and Russia to make up for lost production in Nigeria and delays at the Kashagan field in Kazakhstan. Oil companies are scrambling for assets as resources in the North Sea and Alaska age and countries such as Venezuela demand a greater share of output. ``Eni is the most obvious buyer because of the synergies on the ground in Congo,'' said Jon Dunningham, an analyst with Seymour Pierce in London. ``It's a fairly good opening bid, but it may go up.'' Burren shares traded at 1,173 pence at 2:01 p.m. in London, valuing the company at 1.64 billion pounds. Eni shares added 1.1 percent to 26.19 euros in Milan trading. Burren held 216.8 million barrels of proven and probable reserves as of Dec. 31, according to the company Web site. That means Eni is offering about $13.80 a barrel for Burren's oil and gas. Bids Rejected ``Burren confirms that it has received a number of approaches in relation to possible offers for the company at up to 1,100 pence per share,'' the U.K. company said in a separate statement distributed by the Regulatory News Service. ``The Board has rejected these conditional proposals on the grounds that they fail, by a significant margin, to recognize the value'' of the company. A purchase of Burren would expand Eni's stake in the M'Boundi field in the Republic of Congo and give it access to deposits in Turkmenistan. The Italian oil company in February bought most of Etablissements Maurel & Prom SA's assets in the Republic of Congo for $1.4 billion. That purchase would increase Eni's production in the African country from 67,000 barrels a day last year to 100,000 barrels a day in 2010, Eni said then. ``It makes sense to acquire assets they think are undervalued and certainly Congo falls into this category,'' said Charlie Sharp, a London-based analyst with Jefferies International Ltd. Eni in April agreed to buy Dominion Resources Inc.'s exploration and production properties in the Gulf of Mexico for $4.8 billion to triple its output in the region. Production Gains Burren's first-half production rose 11 percent to 36,800 barrels of oil a day. Output from Turkmenistan in the period increased to 24,400 barrels a day from 20,800 in January. Maurel & Prom, along with shareholder Burren, on Oct. 4 said they abandoned the Doungou-1 exploration well in Congo because of the poor quality of the reservoir. There is ``plenty of upside potential despite Doungou-1,'' Dunningham wrote today in a report. Dunningham has a ``buy'' recommendation on Burren stock. The board of Burren rejected the offer on Sept. 28, Eni said in its statement. Burren directors and related investors account for about 20 percent of the shares, according to exchange filings.



Eni SpA, Italy's biggest oil company, offered to buy Burren Energy Plc for about 1.5 billion pounds ($3 billion) in cash to add production in Congo and Turkmenistan.

Eni proposed paying 1,050 pence for each Burren share, the Rome-based company said today in a statement. Shares of Burren, which rejected the offer and said it has received more than one approach, climbed as much as 29 percent to a record 1,185 pence, suggesting investors anticipate a higher bid will be made for the London-based oil explorer.

Eni this year has agreed to pay about $10 billion for oil and gas deposits in the Gulf of Mexico, Africa and Russia to make up for lost production in Nigeria and delays at the Kashagan field in Kazakhstan. Oil companies are scrambling for assets as resources in the North Sea and Alaska age and countries such as Venezuela demand a greater share of output.

``Eni is the most obvious buyer because of the synergies on the ground in Congo,'' said Jon Dunningham, an analyst with Seymour Pierce in London. ``It's a fairly good opening bid, but it may go up.''

Burren shares traded at 1,173 pence at 2:01 p.m. in London, valuing the company at 1.64 billion pounds. Eni shares added 1.1 percent to 26.19 euros in Milan trading.

Burren held 216.8 million barrels of proven and probable reserves as of Dec. 31, according to the company Web site. That means Eni is offering about $13.80 a barrel for Burren's oil and gas.

Bids Rejected
``Burren confirms that it has received a number of approaches in relation to possible offers for the company at up to 1,100 pence per share,'' the U.K. company said in a separate statement distributed by the Regulatory News Service. ``The Board has rejected these conditional proposals on the grounds that they fail, by a significant margin, to recognize the value'' of the company.

A purchase of Burren would expand Eni's stake in the M'Boundi field in the Republic of Congo and give it access to deposits in Turkmenistan. The Italian oil company in February bought most of Etablissements Maurel & Prom SA's assets in the Republic of Congo for $1.4 billion. That purchase would increase Eni's production in the African country from 67,000 barrels a day last year to 100,000 barrels a day in 2010, Eni said then.

``It makes sense to acquire assets they think are undervalued and certainly Congo falls into this category,'' said Charlie Sharp, a London-based analyst with Jefferies International Ltd.

Eni in April agreed to buy Dominion Resources Inc.'s exploration and production properties in the Gulf of Mexico for $4.8 billion to triple its output in the region.

Production Gains
Burren's first-half production rose 11 percent to 36,800 barrels of oil a day. Output from Turkmenistan in the period increased to 24,400 barrels a day from 20,800 in January. Maurel & Prom, along with shareholder Burren, on Oct. 4 said they abandoned the Doungou-1 exploration well in Congo because of the poor quality of the reservoir.

There is ``plenty of upside potential despite Doungou-1,'' Dunningham wrote today in a report. Dunningham has a ``buy'' recommendation on Burren stock.

The board of Burren rejected the offer on Sept. 28, Eni said in its statement. Burren directors and related investors account for about 20 percent of the shares, according to exchange filings.

Via: Bloomberg
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