Faroe Cries Foul over DNO Move (Inc. DNO Stake)
(Updates in italics with disclosed DNO equity stake in Faroe)
London AIM-listed independent Faroe Petroleum, mainly active in the UK and Norwegian upstream, said August 16 it will oppose plans by DNO to put its top two executives on Faroe’s board.
Faroe Petroleum’s board said it acknowledged receipt of a request from DNO to convene a Faroe general meeting in order to consider a shareholder resolution to appoint DNO exec chairman Bijan Mossavar-Rahmani and DNO managing director Bjorn Dale to Faroe’s board.
Faroe said its board is “very concerned that DNO has taken this action and intends unanimously to recommend that shareholders vote against DNO's proposed resolutions,” noting that DNO competes with Faroe offshore Norway and that having DNO executives on its board could give rise to "potential conflicts of interest."
It added that it believes DNO has an “undisclosed strategy”... "to try and gain control of Faroe's business without making an offer to all shareholders at an appropriate premium."
It also said that a significant number of Faroe's major institutional shareholders have provided clear guidance that they do not wish DNO to be represented on Faroe’s board. Further, since its initial public offering in 2003, Faroe said it has had significant shareholders – such as Dana Petroleum, South Korean state KNOC, UK utility SSE, and Israel’s Delek Group – but none of them had a board seat.
Faroe said it is confirming whether DNO's request is validly served; once that process has been completed, a formal notice of a general meeting would be despatched to shareholders, it said, urging shareholders in the meantime to take no action.
DNO announced April 26 it had acquired 28.71% of Faroe Petroleum for £1.25/share through four separate transactions in April - one of which included buying Israeli firm Delek Group's 15.37% stake.
Faroe listed its top eight shareholders as at March 9 2018 in its latest annual report published end-April this year as: Delek 15.37%, US fund BlackRock 8.96%, UK fund Aviva 6.57%, JP Morgan 5.18%, UK fund Invesco 4.07%, and three others each with about 3%: the UK's Legal & General, AXA, and Faroes fund Tjaldur. Faroe's 2017 equity production was 14,349 barrels of oil equivalent per day (2016: 17,395 boe/d).
Oslo-listed DNO announced August 16 its first dividend to shareholders in 13 years - 2 kroner per share - after reporting a 1H2018 net profit of $61mn chiefly from its Iraqi Kurdistan oil operations. A week ago Faroe announced pre-tax unaudited 1H2018 earnings (Ebitda) were £76mn ($98mn), including a £28mn compensation payment, while narrowing its FY2018 production guidance to 12,000 - 14,000 boe/d".