Enterprise still vulnerable to bid

Enterprise Oil remained firmly in bid target territory yesterday after its strategy presentation failed to convince the City that it must remain independent.

The exploration and production company said it had had no contact with Eni, the acquisitive Italian energy group, since it received an approach in December. Enterprise revealed the takeover interest last month, which was rebuffed, and it brought forward a strategy announcement by the new chief executive Sam Laidlaw.

Although Mr Laidlaw impressed investors and analysts with a polished performance yesterday, they complained the message lacked anything new of substance. Eni has already bought two UK oil and gas independents and they said it had every chance of a hat-trick.

The message yesterday from Enterprise, in what amounted to a defence document, was that it will take fewer risks and improve returns.

"We need to focus on value, not volume, and establish a really strong performance culture," Mr Laidlaw said. "It is not going to take years to transform this business, you will see the change in weeks and months."

Mr Laidlaw, who replaced Pierre Jungels, emphasised action had already been taken in the three months he has been at the helm. Enterprise yesterday revealed a series of deals that remodelled parts of its portfolio. It will also reduce the number of staff in its London headquarters from 300 to 200, to save £20m a year, and it entered into a joint venture with Innogy to supply gas to western Europe. Additionally, earlier this month, Enterprise ditched its exploration director, Andrew Armour, after the company failed to meet production targets in 2000 and 2001.

Jon Wright, an analyst at HSBC, said: "There was not enough to change investors' perceptions. It remains a bid target. You could say that the push for value over volume is because they don't have volume growth coming through this year."

Enterprise set a target return on capital employed of 13 per cent, assuming an oil price of $18 a barrel, but Mr Laidlaw admitted this was below the aims of the large integrated players.

Analysts believe that Eni will now lie in wait for Enterprise's shareholders to lose patience or for the company to fail to deliver what was promised yesterday.