DNO Takes over Faroe Petroleum
Norwegian producer DNO has now boosted its shareholding in Faroe to 72.8%, it said January 10, for which it paid between £1.598 ($2.03) and its final bid price of £1.60/share.
DNO CEO Bijan Mossavar-Rahmani said he appreciated the intent of Faroe's board to work with DNO to ensure an orderly transition of control of the company. He also said that it would be better for Faroe's assets, most of which are Norwegian, to be "in the bosom of DNO, Norway's oldest independent oil and gas company. We have also repeatedly stated that DNO attaches great importance to retaining the knowledge and expertise of the Faroe team who, we believe, in partnership with DNO, can extract increasing value from the Faroe assets."
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He praised Faroe for its vision, fortitude and a "dollop of luck"; but said it was in the nature of the industry that "small, successful businesses are sold to larger ones with greater managerial and operational depth and stronger financial firepower and which, in turn, are swallowed by even larger companies. Faroe had a good run.The baton now passes to DNO," he concluded.
Dry wells and reserves downgrades for Faroe's assets that were announced late last year and early this, combined with a lowish oil price, will have helped make up the minds of wavering shareholders.
Analysts at Cantor Fitzgerald said that although the remains low compared with its own updated valuation, which implies over 20% upside, the "weak recent newsflow and market conditions have, perhaps unsurprisingly, swayed shareholders. Given the potential uncertainty over the company’s future under DNO’s control, we believe that shareholders should now tender their shares."