Shares in North Sea oil and gas firm Ithaca Energy surged more than 27% today after it said it had received a takeover proposal from an unnamed firm.
Ithaca, registered in Canada but headquartered in Aberdeen, added it was making the announcement after changes to its share price on the Toronto Stock Exchange but stressed discussions were at a “preliminary stage”.
It said it had “received a confidential, non-binding proposal to acquire all of the outstanding shares of the company” and was being advised by CIBC World Markets.
But it added: “The board of the company wishes to stress that discussions are at a preliminary stage and there can be no certainty that the approach will lead to an offer being made for the company.”
Ithaca said the proposal would have to be approved by its board and would be subject to due diligence, among other things.
Because the firm is registered in Canada it is not subject to the UK City code on takeovers and mergers.
Analysts said the potential Ithaca deal and Premier Oil’s recent takeover of EnCore Oil followed a relatively quiet period of corporate activity in the sector.
Andrew Reid, Aberdeen-based group chief executive at advisory firm Douglas Westwood, said: “There hasn’t been a huge amount of corporate activity in the UK sector in recent years.
“Ithaca is probably attractive because it has a mix of production and cash flow plus development opportunities.
“Who may be interested? It could be anyone. It is unlikely to be any of the major exploration and production firms.
“It will probably be someone a similar if not slightly bigger to Ithaca.”
Mr Reid added: “It could be someone looking to consolidate their UK position or wanting to enter the UK market.”
Ithaca said it remained focussed on first oil on its North Sea Athena development, due to double its production to 10,000 barrels of oil equivalent per day.
It is planning an appraisal well on its Hurricane discovery and working towards development of its Greater Stella Area, in the central North Sea, which is also expected to double its output.
In 2007, Ithaca, which now employs about 35 people, rejected a cash and share deal worth about £180million from US oil and gas operator Endeavour International.
Earlier this month, Ithaca said it had more than £64.9million cash at the end of 2011 and was planning 2012 net capital expenditure of about £136million, mostly on developing Greater Stella.
Recommended for you
