Scottish oil and gas operator Bowleven said yesterday a suitor was now carrying out financial checks on the firm following a takeover approach.
Bowleven revealed last week it had received an approach over a possible cash offer for the company at 150p a share, valuing it at about £130million.
Chief executive Kevin Hart told the Press and Journal yesterday the potential bid was a step closer to a firm offer, with the unnamed third party now carrying out due diligence.
Without revealing the identity of the suitor, he added: “We think they are an eminently sensible company.”
Edinburgh-based Bowleven is focused on Africa, with particular emphasis on the Gulf of Guinea. Mr Hart – a former pupil at Ellon Academy – said the low oil price and economic turmoil were challenging conditions for the industry, severely affecting the availability of debt and equity funding but Bowleven had “cash on the balance sheet and no near-term commitments”.
Bowleven, which reported pre-tax profits of £56.6million for the six months to December 31, 2008, compared with losses of £7.5million a year earlier, said it had about £20million of cash.
The Alternative Investment Market-listed company also said it was continuing to review all available funding options, including the potential farm-out of its operations in Cameroon and Gabon, adding: “A final decision on proceeding with any of the funding options currently available to the group will be dependent upon further discussions on the possible cash offer for the company.”
The main contribution to first-half profits was finance income of £60.5million, mainly the boost to the balance sheet from a strengthening of the US dollar against the pound.
Bowleven said the potential takeover bid, at a level the board was “minded to recommend” to shareholders, could radically alter the outlook for investors. It added: “Irrespective of the outcome of the possible offer and despite the challenging market conditions, we believe the outlook for the business remains extremely positive.”
US independent Noble Energy, which already has various assets in west Africa, has been linked in media reports to the potential offer.
Bowleven shares closed up 0.5p at 111.75p.