Soco Quits Hunt for Ophir Energy
Soco International has abandoned a bid to buy Ophir Energy, the small London-listed oil and gas investor announced on March 6.
In a “response to speculation in the market relating to Soco’s potential interest in a combination with Ophir Energy,” the company said it has dropped its interest in the UK independent after having had an offer rejected in January.
The rejection came days before Ophir, which operates exploration and production assets in Africa and Asia, agreed to sell 100% to Indonesia’s Medco for $512mn. The deal went through at a premium of 65.7% after Ophir rejected an earlier offer of $437mn. That firepower appears to have pushed Soco out of contention.
“Soco has for some time believed that a combination with Ophir would create significant and long-term value for shareholders in both companies,” Soco said.
“In light of Ophir’s subsequent announcement of a recommended all cash offer of 55 pence from Medco, Soco believes that a share-based combination with Ophir would currently be challenging to execute and so would represent an unacceptable level of risk for Soco shareholders,” the statement continued.
Soco has targeted several acquisitions following recent divestments in Congo-Brazzaville and Angola-Cabinda, which left its asset portfolio limited to Vietnam. A year ago, it called off a merger with Jersey-registered independent Kuwait Energy, which holds production assets in Egypt, Iraq, Oman and Yemen. In September, Soco said it had agreed to buy Merlon Petroleum El Fayum Company, which it plans to use as a springboard to the Middle East and North Africa.
The Merlon deal should be closed in the first half of this year, Soco said as it released preliminary results for 2018. The acquisition will add proven and probable (2P) reserves of 24mn barrels and contingent (2C) resources of 37mn barrels. However, the company suggested it does not expect the deal to significantly add to its 2018 production average of 7,274 barrels of oil equivalent/day, which fell from 8,276 boe/y in 2017.
The asset sales last year boosted profit before tax to $80mn from $23mn the previous year, while revenue growth from $156mn to $175mn remained more subdued.