Rumours of takeover bid boost Tullow's share price
Published 08/09/2010 | 05:00
SHARES in Tullow Oil, the largest of all Irish companies quoted, rose yesterday as several newspaper reports stoked rumours of a possible bid for the company.
The shares closed up 3.9pc at £12.28 yesterday after the London-based 'Independent' said the explorer may be a takeover target.
The 'Independent' cited traders as saying that a potential bidder was preparing a £20-a-share offer for Tullow. The 'Daily Mail' said that China National Offshore Oil may be considering a takeover.
An offer of £20-a-share would value the company at £17.7bn. The 'Financial Times' said that a "Chinese energy group" was being touted as a potential buyer, but added that the talk was of £13bn bid. ExxonMobil was seen as a predator, it added.
Tullow, which was founded by former Aer Lingus executive Aidan Heavey in 1985 and named after the Carlow town of the same name, moved its headquarters from Ireland to the UK to tap investors after it began to make money in the North Sea.
It has recently run into problems with its largest oil field in Uganda where a dispute with the government led to a production licence being suspended.
"The bid rumour circulating yesterday lacks credibility in our view and the timing would appear to be out considering what is going on in Uganda," Richard Griffith, an analyst at Evolution Securities, said in a note.
George Cazenove, a spokesman for Tullow, declined to comment. Jiang Yongzhi, a spokesman for Hong Kong-listed Cnooc and Lv Bo, a spokesman of its Beijing-based parent China National Offshore Oil, were both unavailable for comment.
The shares may also have been helped by the Ugandan government which yesterday said it would favourably consider an application from Tullow if the company applied for a production licence for the Kingfisher field in western Uganda.
Energy Minister Hilary Onek said his government had not yet decided whether to allow Tullow to apply exclusively for the licence.
Tullow estimates the Albertine basin holds at least two billion barrels of recoverable reserves. It had scheduled to start production in the last quarter of 2011 before the dispute threw its plans into doubt.