Centrica said yesterday its cash offer for Aberdeen’s Venture Production was “highly attractive” to the takeover target’s shareholders at a time of continued economic uncertainty and market volatility.
The British and Scottish Gas owner was responding to Venture’s continued advice to shareholders to reject Centrica’s 845p a share bid.
Venture’s stance on Tuesday was that an independent assessment by Resource Investment Strategy Consultants (RISC) had valued its shares at a minimum of £10.66 and possibly up to £13.85 depending on future developments.
The bidder said yesterday it believed the RISC report, which followed an independent DeGolyer & MacNaughton (D&M) report on Venture’s reserves and contingent resources dated May 14, lacked credibility in a number of important respects. Centrica said the RISC report relied on too optimistic assumptions on the outlook for gas prices.
It said 70% of Venture’s reported proven and probable reserves were natural gas, adding that gas prices were the key driver of Venture’s fundamental valuation.
Centrica added: “The RISC report is based on theoretical gas prices that include an 80% increase in nominal terms over the next five years. Gas prices in the UK have continued to be weak and volatile and have not improved as oil prices have done this year.
“Structural factors are impacting gas prices, including uncertainty around global gas demand, increases in global gas supplies, and the availability of import facilities for liquefied natural gas in the UK.
“The RISC report values Venture’s reserves without appropriate regard to the risks associated with their possible development.”
Centrica’s response said proven reserves accounted for only 37% of Venture’s total proven and probable reserves, according to the D&M reserves estimate of 243million barrels of oil equivalent. It warned non-proven reserves were subject to a range of risks including the potential need for further appraisal drilling, and RISC made insufficient adjustment in this respect, including for significant and sustained investment.
Centrica said yesterday its offer was final and would not be increased, unless another bidder emerged. The first closing date is 1pm on Thursday, August 13.