Premier Oil is expected to make an announcement to the stock market this morning after rejecting a merger bid which would have made it one of the biggest firms in the UK.
The independent – whose assets include the Balmoral area fields as well as interests in the Huntington, Scott and Telford fields in the UK North Sea – has rejected two bid approaches from Ophir Energy, which wants to create a combined oil exploration major.
The latest all-share merger proposal was unanimously turned down by Premier’s board a fortnight ago because it was not considered to offer a good strategic fit, according to a source.
On its website Ophir Energy said: “Further to recent press speculation, Ophir confirms that it recently made an approach to the Board of Premier with an indicative proposal to merge the two businesses.
“The Ophir Board believed that merging the two businesses provided the potential to create a well-funded, re-focussed, full cycle Exploration and Production company. However, the proposal was subsequently rejected by the Premier Board.
“Ophir confirms that it is no longer considering making an offer for Premier,” the statement added.
Combining Premier and Ophir would create a firm operating from east Africa to Asia to the North Sea and the Falklands.
It would be the fifth largest oil and gas explorer listed in London, behind BP, Shell, BG Group and Tullow Oil.
Ophir, led by former Goldman Sachs banker Nick Cooper, made its first bid approach in February, days after Premier announced that its chief executive Simon Lockett would be stepping down after nine years in the role.
Shares in Premier jumped on news of the departure of Mr Lockett, whom shareholders have held responsible for successive downgrades to production guidance in 2013 and disappointing forecasts for this year.
Mr Lockett, 49, joined Premier from Shell in 1994, taking on the role of chief executive in June a decade later.
During his time as chief executive, average production has increased by 56% to 58.2million barrels of oil equivalent per day, and proven and probable reserves have risen by 65% to 292million barrels.
Premier, which has a market capitalisation of £1.72billion, was founded in Scotland in 1934 as the Caribbean Oil Company to look for oil and gas in Trinidad.
Ophir, worth £1.44billion pounds, floated on the London stock market only three years ago.
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