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Small Talk: 3Legs to support platforms for shale gas across Europe

Nikhil Kumar
Monday 13 June 2011 00:00 BST
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One way to attract attention to your listing is by settling on an unusual name, and few are as unusual as 3Legs Resources. Seeking to work out its roots, we asked the chief executive, Peter Clutterbuck, who pointed us to the Isle of Man and its flag, with its three legs against a red background.

The company, it turns out, was founded by an Isle of Man family, who, Mr Clutterbuck informs us, turned to the flag for inspiration.

Today, 3Legs, which began conditional trading last week, and which will have its first day of unconditional dealings on AIM this week, is still based in the Isle of Man. Its main operations, however, are in northern Poland, where it has six shale gas exploration licences in the Baltic basin covering nearly 4,400 square kilometres.

Investors in the energy sector will be familiar with the excitement generated by moves to extract natural gas from shale or sedimentary rock composed of mud, quartz and calcite. Technical breakthroughs in the extraction process have made this so-called "unconventional gas" more viable, and the other side of the Atlantic has seen much activity in this area, with energy majors rushing to capitalise on the advances. 3Legs – which is chaired by the former Tory energy minister Tim Eggar – is out to do the same sort of thing on this side of the pond.

Around two years ago, it partnered with ConocoPhillips, the US energy giant committing itself to fund the costs of an exploration programme in the Baltic basin. The deal covers data surveys and up to three wells. In return, Conoco gained the right to acquire a 70 per cent interest in the fields. The third of those wells will be completed soon and, beyond that, 3Legs is looking at a dozen or so wells elsewhere in the basin.

Although northern Poland dominates the agenda, the group also holds onshore explorations licences in southern Poland and in south-west Germany, and another two are under application in France. Clearly, there's potential for more deals like the one with Conoco, whose partnership covers only the Baltic basin. This will be one to watch as the operations progress after the listing.

Office suppliers in deal dance

It has been a busy couple of weeks for followers of the office space supplier MWB Business Exchange (MBE). Back at the end of May, the group said it had received a £60m cash proposal from its bigger rival Regus, but that it was minded to back an earlier offer by its majority shareholder, MWB Group, which values the office space group at closer to £30m.

MBE said Regus's indicative proposal was subject to two pre-conditions. First, that its independent directors back the bid and, second, that MWB gives its consent. The two conditions, MBE said, could not be met, as the independent directors thought there was more long-term value in the MWB offer. It also said MWB did support the Regus proposal.

That might have been that, but then Regus hit back, saying its proposal was superior, and offered a bigger premium.

Cue a response from MBE, which said Regus's announcement had introduced "a new pre-condition relating to due diligence, and reserved its right to reduce its indicative offer price by reference to a number of issues".

This, MBE said, "qualifies the extent to which any weight can be attached to the statement by Regus that it remains committed to its offer". Fast forward to June, when Regus said that although it was serious about the offer, it would withdraw the proposal "in six days" if the independent directors of MBE or the MWB board did not enter into discussions by 5pm on 13 June. MWB Group published its response on the day after, reiterating that the Regus offer hinged on certain conditions, and that, as far as it understood, the independent directors had engaged and met with the company.

Then came another, detailed release from MBE, in which its independent directors restated their support for the MWB offer. They also invited Regus to table an unconditional offer.

That is where it would have ended but, of course, Regus shot back. On Friday, the FTSE 250-listed group reaffirmed its offer. Not only that but it said it was "dropping all previously announced reservations, subject to confirmatory due diligence." With the 13 June now upon us, investors must be on the edge of their seats to see what happens next.

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