The prospects of a bidding war for Premier Oil increased yesterday, as it emerged that India's state-run petroleum exploration company, Oil & Natural Gas Corp (ONGC), is considering tabling an offer for the London-listed company.
Last month, Premier revealed it had received a conditional offer from a mystery bidder, believed to be Dubai Energy, the United Arab Emirates-based business owned by Dubai's Crown Prince, Sheikh Mohammed bin Rashid al-Maktoum.
ONGC is believed to be considering an offer via its joint venture with Lakshmi Mittal, the steel baron who is one of Britain's richest men. The Indian company is thought to be waiting for clearance from the Indian government before it makes its approach.
In an interview yesterday, ONGC's chairman, R S Sharma, confirmed the group was looking at a number of acquisition opportunities. "We also know that Premier is up for sale," he said. "It's an opportunity we are looking at closely, but haven't done any due diligence yet."
A takeover by ONGC would be controversial, however, due to the fact that Premier owns oil assets in Pakistan. It is thought any offer from ONGC would have to be conditional on Premier's Pakistani assets being immediately sold on.
Shares in Premier rose another 2.6 per cent yesterday as news of the potential rival bidder emerged, and are now up more than 25 per cent since rumours of the original offer surfaced last month. The stock closed yesterday at 1,313p, giving the company a market value of £1.07bn.
Premier produces oil in a number of locations around the world including the North Sea, Pakistan, Mauritania and Indonesia.
An approach for Premier by ONGC may not be the last offer to emerge. Dana Petroleum has also been seen as a potential predator, while Shell was also previously rumoured to be running the slide rule over Premier. A bidding war may also ignite interest in other independent oil companies, such as Cairn Energy and Soco International.
Premier has had a good year, having successfully struck oil at five out of seven exploration sites during the first half. The company plans to be on at least four new high-impact wells each year, and is targeting production of 50,000 barrels of oil a day within the next few years. It currently produces around 33,000.Reuse content