North Sea oil and gas explorer Valiant Petroleum said today it was looking at a possible sale of the business.
It added it had asked Morgan Stanley to carry out a review of options including a farm-out or disposal of assets to a merger or sale of the business.
Analysts at investment bank Macquarie suggested a merger would be the most likely option, with Cairn Energy subsidiary Agora Oil and Gas, EnQuest and Faroe Petroleum most likely to be interested in Valiant’s assets.
Valiant chief executive Peter Buchanan said a merger would help turn the firm into a strong mid-cap operation.
He added: We have decided now would be a good time to review our options.
“We’ve built a platform – we are a full operator in the UK and an exploration operator in Norway, so we’re looking at options for inorganic growth alongside organic growth.
“Really we are looking at a strategic merger. Size is important in the exploration and production sector.
“If we were to combine with a company that offered us access maybe to more exploration acreage, that would be a good thing.
“If it had production and enabled us to diversify or give us access to a new geography, that also would be good.”
He said he hoped a transaction could be finalised by the end of the year.
Shares in Valiant, valued at £187million, were up by 4.35% at 479.25p last night.
The firm also reported it had enough cash for its 2013 production, development and exploration plans but wanted to review its position for 2014-16.
Valiant said it was still on target for production of 7,000-8,500 barrels of oil per day by the end of 2012.
But Mr Buchanan admitted the firm’s exploration programme in the first half of 2012 was “disappointing”. Of four wells, only the Orchid prospect found oil.
An exploration write-off of £48million pushed the firm into the red in the first half, with pre-tax losses of £27.3million, after profits of £49.5million a year earlier.
First oil from its operated Causeway field was on track for early in the fourth quarter of this year, with a second phase of development, the Fionn field, due online next year, Valiant said.
Woking-based Valiant employs about 70 people, including four in Aberdeen.
It has exploration assets and production in the UK North Sea and exploration assets off Norway, including in the Barents Sea.
The firm has plans in 2013 to drill the high-impact west of Shetland Handcross exploration well, which it operates and has 90% equity in, using the Stena Carron drill ship.
Recommended for you
