Eni offered 1,230 pence for each Burren share, after a previous bid was turned down, the Rome-based company said today in a statement distributed by the Regulatory News Service. Burren surged as high as 1,246 pence in London, suggesting investors expect a higher bid may emerge.
``It's a good bid, but it may not be the end of the story yet,'' Phil Corbett, a London-based analyst at ABN Amro Holding NV, said by phone. ``Bids in the range of 12.50 pounds to 13 pounds could be justified.'' Corbett said he has a ``buy'' recommendation on Burren stock.
Oil companies are stepping up the search for assets as resources in the North Sea and Alaska age and countries such as Venezuela demand a greater share of output. Buying Burren will expand Eni's stake in the M'Boundi field in the Republic of Congo and give it access to deposits in Turkmenistan.
The offer represents a 51 percent premium to Burren's average closing share price in the three months through Oct. 8, Eni said in the statement. The offer was accepted by all of Burren's directors and some management, Eni said.
Burren shares surged as much as 9.1 percent. They traded 100 pence higher at 1,242 pence as of 1:21 p.m. local time, valuing the London-based company at 1.75 billion pounds.
Burren produces 35,000 barrels of oil a day from fields in the Republic of Congo and Turkmenistan and had 217 million barrels of reserves at the end of 2006, according to its Web site. The company is also exploring for crude and natural gas in Egypt and Yemen.
``With high oil prices, Eni did well to buy the company for its reserves,'' said Gianluca Ferrari, who manages $370 million in assets at Banca Valsabbina in Brescia, Italy. ``It's always best to diversify and expand.''
Burren rejected Eni's initial 1,050 pence offer last month, saying it had received more than one approach.
Eni is seeking acquisitions to meet its target of boosting production by an average of 4 percent a year. Output this year will be in line with 2006's daily average of 1.77 million barrels, Eni said last month.
``The transaction will increase our production in Congo,'' Eni Chief Executive Officer Paolo Scaroni said in the statement. The Central Asian state of Turkmenistan offers an ``increasingly attractive growth potential,'' he said
This year, Eni 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. Eni and partners are now in negotiations with the Kazakh government over delays at that field.
In February, Eni bought most of Establissements Maurel & Prom SA's assets in the Republic of Congo for $1.4 billion, to raise production in the African country to 100,000 barrels a day in 2010 from 67,000 barrels a day last year. Burren is a partner with Maurel & Prom in some production deposits in Africa.
Via: Bloomberg| by Anthony DiPaola