Texas Oil strikes out on bid trail

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The Independent Online

Energy minnow Texas Oil and Gas is embarking on an acquisition spree in a bid to ramp up its market value from £6m to more than £50m.

The group, listed on the Alternative Investment Market, intends to spend the next six to eight months on the acquisition trail before transferring to the London Stock Exchange's main list.

Chief executive Mike Chandler said the oil and gas industry was ripe for consoli- dation, particularly among smaller players, and the group was already looking at several possible bid targets, including one business "10 times bigger than us". He added: "We're going to be the aggressor."

The group is targeting companies in the US and Canada that are under-capitalised or mismanaged.

Texas Oil and Gas, which has most of its operations in east Texas and specialises in refurbishing shallow oil wells, transferred from the unregulated Ofex market to Aim in 2002 and will finance the spree through equity and cash. Mr Chandler said the company wanted to stay debt-free but conceded it would consider changing that when it transferred to the main list.

Part of the growth spurt will include the transfer of Mr Chandler's own oil wells into the business. Mr Chandler founded M-C Production and Drilling in 1975 and agreed to merge his operations when he became chief executive of Texas Oil and Gas.

The company's decision to go on the acquisition trail coincides with the continuing battle for fellow minnow Fusion Oil & Gas. Rival Sterling Energy has had its £39.5m offer rebuffed but claims it is only about 4 per cent shy of securing a majority of acceptances from shareholders. Fusion, which has a West African oil portfolio, says it is in talks with other bidders.