Pentex eyes expansion as it comes to market

Pentex Oil, the production and exploration group, joins the stock market today via an introduction expected to value the company at about £20m.

Pentex also said it could not exclude tapping the market for $10m-$30m over the next year to further its plans to buy more oil- and gas-producing acreage, probably in the North Sea.

Henry Cameron, executive chairman, said the company had received some approaches about assets for sale, but that any deals would probably crystallise only later this year.

A principal reason for the listing, he said, was to provide Pentex, based in Aberdeen, with more financing options for expansion. Initially, there will be more than 20 million shares in issue. The biggest shareholder - Strand Associates, with 26 per cent- is understood to have paid £1 a share.

Following the listing the directors will retain their 25.4 per cent holding in the company, which operates 12 producing onshore fields in the UK and Italy. Pentex, which employs 70, is also a partner in eight producing fields onshore and offshore in the UK Continental Shelf. Ten of the UK onshore fields are in the East Midlands, where the company supplies natural gas to industrial consumers.

The company was formed in 1981 by a group of Scottish businessmen who wanted a slice of the expanding oil and gas industry. It ran short of cash in the mid-Eighties, when a new group of investors, led by Mr Cameron, took control.

The group produces 7,000 barrels of oil or oil equivalent daily; it has proven and probable reserves of 21 million barrels of oil and 9.5 billion standard cubic feet of gas.

Operating profits of £2.4m in 1991 compare with £2.5m in the first six months of 1994.

Mr Cameron said Pentex was predominantly production-based, avoiding the excessive risks of exploration failures. He added that potential investors could regard the group, which had core reserves lasting 20 years, as a play on the oil price, taking the view that the worst of the oil price fall was over.