Ophir Energy Plc has pulled out its offer to Premier Oil Plc for merging the two companies businesses. According to people with knowledge of the process, Premier Oil has rejected two offers for acquisitions. Ophir Energy has been seeking to finalize a merger with a larger competitor in order to boost its cash flow.
As reported by the Financial Times, Ophir Energy Plc made an official statement posted today that it “is no longer considering making an offer for Premier”.
On the other hand, Premier Oil has recently announced that it was looking for a new Chief Executive Officer to take the lead after Mr. Simon Lockett have left the company in February. According to the people with knowledge of the matter, the first offer of Ophir Energy Plc came only a few days after the announcement.
The pre-tax profit of Premier Oil for 2013 amounted to 285 million dollars. The company was reported to have produced a total of 582 000 barrels of oil equivalent per day in 2013. If the deal was to be finalized, that would have provided Ophir with cash flow for further investments. Over the last few years, Ophir Energy has mainly focused on exploration and succeeded in making a large gas find in 2012 in the region of Tanzanias coast. Ophir Energy Plc announced 667 million dollars in cash for the previous financial year.
Premier would have also benefited by an eventual deal, especially considering the fact that its share price have decreased by about 11% over 2013.
If an eventual deal was to be sealed, such a merger would have put the new entity on the position of the fifth-biggest oil and gas company listed at the London Stock Exchange, with a market cap of about 3 billion pounds. Moreover, such a deal would have provided a significant cash flow to Ophir Energy by adding some of Premiers products and production assets.
The current Chief Executive Officer of Ophir Energy – Mr. Nick Cooper explained that the company will still be focused on exploration and appraisal.
Ophir Energy Plc lost 1.36% to trade at 240 pence per share by 14:22 GMT, marking a one year change of -40.46%.
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