DNO Buys more Faroe Shares

Norwegian producer DNO has  bought a further 32,250,916 Faroe shares, or about 8.65% of the company at the raised price of £1,60 ($2.04)/share, it said January 9. It now owns or has acceptances for about 52.5% of the ordinary issued share capital of Faroe, which is likely to make its offer unconditional in a few days, it said. It said January 9 that if it did not succeed in its bid to buy Faroe outright, it would be comfortable with a minority position. No alternative bidder has appeared.

Cantor Fitzgerald said January 9 that it had lowered its Faroe price target, to reflect the recent drilling results, the Oda field reserves downgrade and updated pricing assumptions, but only down to £1.95p from its earlier £2.02p.

It said it still viewed the improved, all-cashoffer as "insufficient, based on the significant discount to our valuation and Faroe’s excellent track record, despite the recent set-backs.... DNO appears to be attempting to leverage recent weak newsflow, which, while disappointing, would reduce our valuation by less than 4% combined on a like-for-like basis, and the (understandable) concerns of shareholders over the potential fall in share price should the offer lapse, in order to secure one of the best UK-listed E&P companies at what would remain a bargain price, in our view."