Faroe Petroleum Share Discussion Threads

[corrientes] 12/12/2018 15:30

Didn't they get another company on the cheap ? Can lightning strike twice ?

[oli12] 12/12/2018 14:52

The full 52 page offer document by DNO is worth a read - they have pulled out all the stops.

[scaff55] 12/12/2018 14:46

Myles McCormick in London 3 hours ago
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Norwegian oil producer DNO has started the clock on its bid to take over Faroe Petroleum, giving shareholders three weeks to accept its offer of 152p per share.

DNO on Wednesday published an offer document confirming the price it offered shareholders last month and setting 2 January as its first closing date, as it pushes forward with a hostile takeover attempt of its rival North Sea producer.

“This full and fair offer provides Faroe shareholders a rare opportunity to exit their relatively illiquid Aim-listed positions at an attractive price in a volatile and uncertain market for oil and equities,” said Bijan Mossavar-Rahmani, executive chairman of DNO.

The offer values Faroe at £610m on a fully diluted basis — a level which Faroe’s board has said undervalues the company. DNO already owns a 28.2 per cent stake in Faroe — or 26.2 per cent on a fully diluted basis.

If the offer lapses, DNO cannot make a new offer for another 12 months and said “there can be no assurances” as to its long-term ambitions.

DNO accused Faroe of failing to deliver consistent shareholder returns since its listing 15 years ago. It also criticised a recent asset swap with Equinor, which saw Faroe trade a number of development stage assets for producing assets, saying the company had “jettisoned a crown jewel asset for mature production”.

Faroe said DNO’s criticisms were “unfoundedR21; and “purely a tactic to distract from the simple fact that its offer substantially undervalues the company.” It said DNO was trying to exploit the recent fall in the price of oil to acquire it “on the cheap” and urged shareholders to take no action.

“DNO’s highly opportunistic offer is not only at a substantial discount to the value of the company but also at a substantial discount to comparable portfolio transactions and a substantial discount to the average of all UK takeovers in the last 10 years,” said John Bentley, non-executive chairman of Faroe. “Faroe shareholders should receive an appropriate premium which is not currently reflected in DNO’s offer.”

“Ultimately I think this deal is going to get done. I think there’s a possibility of a slight premium on 152p but I think the [more substantial] premium hopes of October and November are gone now,” said Al Stanton, an analyst at RBC.

“If DNO cant get deal approval they’ll sit there with their stake and frustrate management and push for seats on the board and probably come back in 12 months time,” he added.

[redartbmud] 12/12/2018 14:15

A few days ago I told you that the offer was at the printers, well it is now definitely in the post.
Maybe the will need to sweeten the pill a little, but the odds would appear to be in their court.

[thedudie] 12/12/2018 14:13

I like their style....
td

[bountyhunter] 12/12/2018 14:09

Yes, surprised they didn't include advice on the olive branch ;~)

[binarypilot] 12/12/2018 13:59

Yay! Well done FPM!

They dont like it up 'em.


:)

[bountyhunter] 12/12/2018 13:54

12 December 2018

Faroe Petroleum plc (the "Company" or "Faroe")

Statement regarding Offer by DNO ASA ("DNO")

The Board of Faroe (the "Board", "we") notes the announcement made by DNO today of the posting of an offer document containing the full terms and conditions of its unsolicited offer for the entire issued and to be issued share capital of Faroe not already owned by DNO at 152p per share in cash (the "Offer"), which follows DNO's announcement on 26 November 2018 pursuant to Rule 2.7 of City Code on Takeovers and Mergers (the "Takeover Code").

The Board reaffirms its previous statement that the Offer is opportunistic and substantially undervalues Faroe, and encourages all shareholders to take no action. Furthermore, the Board believes that DNO's offer document contains no substantial new information or arguments to support its Offer.

DNO's opportunistic Offer seeks to exploit the recent oil price fall to acquire Faroe on the cheap

The Offer price of 152p per share represents a:

-- premium of only 21% to the closing share price prior to the Offer announcement, which is about half the average premium paid on all UK takeovers over the last 10 years;(1)

-- premium of only 1% to the three month volume weighted average share price (VWAP) prior to the Offer announcement;(2)

o DNO's presentation of the premium that it is offering with reference to Faroe's share price on 3 April fails to recognise the significant achievements the Company has delivered since then, including the Iris/Hades and Agar discoveries and the recently announced Equinor asset swap; and

-- discount of c.45% to the average price paid recently for comparable North Sea (in particular, Norwegian Continental Shelf) portfolios measured on a per barrel of 2P reserves basis.(3)

DNO's unsolicited Offer ignores Faroe management's proven track record and the Company's exciting independent future, which has been further enhanced by the recently announced Equinor asset swap

-- Faroe has one of the best exploration track records on the NCS. In the last 12 months alone Faroe has drilled three exploration wells and made two commercial discoveries: Iris/Hades and Agar. Iris/Hades is one of the world's largest discoveries in the year to date;

-- Faroe is currently in the midst of the largest drilling campaign in its history with two exploration wells ongoing (Brasse East and Cassidy), four committed exploration & appraisal wells (Pabow, Iris/Hades appraisal, Snadd Outer Outer/Cape Vulture and Bergknapp) and a further five wells being planned (Agar appraisal, Alpha, SE Tor/Gomez, Canela and Brasse Extension) in the next 12-15 months; and

-- The recently announced asset swap with Equinor clearly demonstrates the value your Company creates through active portfolio management, as it has previously done with:

o the acquisition of DONG E&P's Norwegian assets in 2016, which boosted Faroe's production base and created a new strategic hub around the Ula platform; and

o the Petoro asset swap in 2011, in which Faroe swapped its interest in Maria within 18 months of its discovery for a high quality production portfolio.

The Board believes DNO's criticisms of Faroe are unfounded and purely a tactic to distract from the simple fact that its Offer substantially undervalues the Company

-- DNO has criticised Faroe's share price performance, financial flexibility, remuneration policy and corporate governance. The Board believes these criticisms are wholly without substance noting that:

o Faroe's share price has outperformed the FTSE AIM Oil & Gas Index and Brent price over the three year period up to 3 April 2018 (the day before DNO announced its first acquisition of Faroe shares) and 23 November 2018 (the day before DNO's Offer announcement);

o Faroe has a robust balance sheet that has been further strengthened by the recently announced Equinor asset swap which allows the Board to give careful consideration to the optimal mix of reinvestment in the existing portfolio, potential M&A opportunities and returning capital to shareholders following completion of the Equinor transaction;

o Faroe's remuneration policy is in line with its UK E&P peers and at this year's AGM, with the exception of DNO, the Directors Remuneration Report was approved by 99.9% of other shareholders who voted; and

o Faroe is widely recognised for its strong corporate governance culture in line with UK corporate governance best practice.

John Bentley, Non-Executive Chairman of Faroe, commented:

"DNO's highly opportunistic offer is not only at a substantial discount to the value of the Company but also at a substantial discount to comparable portfolio transactions and a substantial discount to the average of all UK takeovers in the last 10 years. Faroe is widely regarded as one of the pre-eminent North Sea E&P companies with a high quality, full cycle and diversified asset base and a management team that, time and again, has demonstrated its ability to create value through exploration and active portfolio management. As such, Faroe would solve DNO's strategic challenges and Faroe shareholders should receive an appropriate premium which is not currently reflected in DNO's Offer."

The Board of Faroe will write to shareholders with its detailed views on the Offer in due course. In the meantime, Faroe shareholders are strongly urged to take no action in relation to their Faroe shares.

- Ends -

[thedudie] 12/12/2018 13:22

I think DNOs suggestions that they needed representation on the board for a say on pay etc and the suggestion that the boards options are "generous" may backfire.

It looks to me that the board appear willing to back their own judgement and take a collective £50million bet that the future is brighter as an independent. That is a lot of money to risk and looks like they are fairly sure of themselves!
td

[bountyhunter] 12/12/2018 12:42

Yes first they make out that the recent deal was bad for FPM and so they would have to reconsider, then surprise surprise they carry on with their hostile approach anyway making out that they are doing us a big favour by offering us some kind of olive branch lol!

[oli12] 12/12/2018 12:39

Well this is definitely a HOSTILE bid.... reading DNO’s assessment of Faroe one wonders why they want to buy it.

Been investing for many years and seen many take overs, i don’t remember reading anything like this ....
I will hold and wait - little downside from here and every chance of an improved offer.

[bountyhunter] 12/12/2018 10:13

maybe not too late for an oil price recovery and Santa rally for O&G shares:


Brent

[wbodger] 12/12/2018 10:11

Not with the oil price, dropped back because it's Enquest ;-)

PMO suffered too. I felt the bid meant FPM would not change much, but both PMO and Enquest were plays on a recovery of oil price, that's all.

[bountyhunter] 12/12/2018 10:04

yes I'll be hanging on here, has ENQ not dropped back with the oil price since you switched?

[wbodger] 12/12/2018 08:46

I sold some of my remaining shares for £1.581 on the Monday of the bid and moved the proceeds to ENQ. I nearly posted an opinion yesterday that trading suggested the bid would be tabled at £1.52, and could not be closed before Christmas (see post #1519) but that if DNO needed the shares obviously being accumulated by a speculator (who has to be at arms length) the final deal would be above £1.58.

At this point hang on and have a Merry Christmas. I believe they will have to pay £1.60, but I have beleieved that all along.

[rogerlin] 12/12/2018 08:28

I have no worry about where the share price will end up if the bid does not succeed. It was higher in the past anyway and has fallen with the oil price in line with the sector, in fact some others (CNE, PMO for example) have fallen heavily. It might fall back short term but will rise again with the oil price in time. There is the success at Agar Plantain, hopes for Brasse and I think the Njord swap is a good one as there are risks of delay and cost overrun in a very expensive project for a small player.

[bountyhunter] 12/12/2018 07:40

There's been buying above 152 for a while - I'm not expecting the current hostile bid to succeed. Also holding.

[ed 123] 12/12/2018 07:37

With hindsight there had been some hints of this over the last few trading days.

It turned out like I was saying, 'at 152p or a face-saving sliver above'.

They don't seem to have any of the big holders onboard at 152p. It's one of those 'who blinks first' situations.

[harry rags] 12/12/2018 07:20

The gloves are off so it should be an interesting few weeks but I do not intend to sell way underpriced IMHOHOLDINGHarry

[steve73] 12/12/2018 05:33

Surely anyone here who will be happy with a 152p bid, would be better off simply selling now (or even better, last week). Anyone NOT selling must be holding out for a white knight.

JMHO, (since I don't hold here) but when I have been holding in a bid situation, I now always taken the first offer and moved on.. Hanging on for a counterbid has (for me) never worked out, and in a few cases, where the bid has failed, the share price has dropped WAY lower... I've learnt my lesson..

NAI, etc, but...

A bird in the hand and all that...

[harry rags] 11/12/2018 16:55

Still a few surprises to come on this one IMHO both sides will be working away furiously to try and secure a deal/ merger/take over/ reverse takeover/ agreed takeover/ stay independent etc etcWe just need to watch and wait Perhaps it will be settled before the end of the tax year Harry

[jasper2712] 11/12/2018 16:53

Not me I am going to be like Brexit - I will go against the majority and hold out for a better deal.

[ed 123] 11/12/2018 16:34

Ha! Nice one, Jasper2712. :-)

Out of our hands, though. DNO and the big holders of Faroe will decide it.

When it's decided I'll follow the majority.

[jasper2712] 11/12/2018 16:08

Ed 123

"a bid of at least 152p will greet us one day."

I think you mean a bid of 152p will make us greet.