Premier Oil soars 8 per cent on takeover offer

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Premier Oil, the UK independent oil explorer, revealed yesterday that it had received a takeover bid, in a deal likely to value the company at more than £1bn.

Speculation centred on a bidder from the Middle East or Asia. Among UK listed companies, it was suggested that Dana Petroleum could be the bidder.

Premier said in a statement: "Premier Oil Plc confirms that it has received a preliminary and conditional proposal regarding a possible offer for the company. The proposal is subject to a number of conditions, including due diligence and financing.

"Discussions are at an extremely early stage and, consequently, there can be no certainty that an offer will be made nor as to the terms on which any offer might be made."

Premier shares closed up 8 per cent at 1,300p yesterday, valuing the company at £1bn. Previously there had been strong rumours that oil giant Shell was looking to buy Premier but analysts were dismissive of that possibility, pointing out that any Shell bid would not be "subject to financing". This indicated that the acquirer would be a smaller oil company, they said.

Nathan Piper, an analyst at Bridgewell Securities, said that, unlike some other independent operators, Premier had no single outstanding assets that would tempt an oil major. "Nobody sticks out as a buyer of the whole lot," said Mr Piper.

Among the possible bidders were reckoned to be Kuspec, the Kuwaiti national oil company, Santos, an Australian independent, or a Chinese company such as China Petroleum and Chemical Corp.

Some also pointed to an Indian predator, such as Reliance or ONGC, the Indian state oil group, but this would be a tricky acquisition for an Indian company given Premier's assets in Pakistan.

London-listed Tullow Oil, which would ordinarily be considered a possible bidder, is thought to be too busy with its Hardman acquisition. Pemex, the Mexican state operator, was also mentioned as a possible buyer.

Premier's chief executive, Simon Lockett, said last month that Premier planned to remain independent and to proceed with a strategy overhaul, which he implemented after taking over at the top about 18 months ago.

Mr Piper said that, among other independents listed in London, those most likely to attract a bid were Soco International and Cairn Energy.