India’s state-owned oil producer ONGC is said to be in talks with British company Imperial Energy Corporation to acquire a stake in the latter. A relatively small oil and gas company based in Leeds in UK, Imperial has said that it has received an “approach” which could result in an offer for the business. Following its statement, the shares in Imperial shot up 23 per cent in early trading to 947 pence. The offer could be valued at £1 billion-plus (opver $2 billion), according to newspaper report in the UK. Earlier in the day, The Times of India had reported that ONGC was in talks with Imperial for a stake-buy.
The company has attracted the interest of India because Imperial has a growing portfolio of oil and gas interests in West Siberia with only 10,000 barrels per day currently on stream but recoverable reserves estimated at 900,000 barrels, UK’s Guardian reported.
Imperial Energy is an upstream oil and gas exploration and production company focused on the Commonwealth of Independent States, and has oil producing blocks in Tomsk region of western Siberia in Russia and Kastanai in north-central Kazakhstan.
For the fiscal year 2007, the company posted losses of $43 million over revenues of $20 million. This deal, if concluded, will strengthen ONGC’s overseas presence, which currently stands at 38 oil and gas projects in 18 countries. In 2005, ONGC and the L.N. Mittal group combine had lost the bid to acquire PetroKazakhstan Inc to China National Petroleum Corporation, who acquired PetroKazakhstan for $4.18 billion. In 2006, ONGC Videsh (OVL), bought 15 per cent of ExxonMobil’s stake in the Campos Basin in Brazil for $1.4 billion.
Imperial Energy was formed in 2004 and is a constituent of the FTSE 250 index. It has a market capitalisation of $1.57 billion and the shares of the company on Friday closed at $15.85 on LSE. The share price of the company has shrunk from $36 this year.
Imperial Energy recently raised around $600 million through a highly discounted rights issue, with an issue price of $12 per share. The issue was subscribed upto 97 per cent. The company went for a rights issue after it failed to raise debt due to the turmoil in the credit markets. This rights issue made the company’s share price fall by almost 25 per cent. Imperial Energy aims to produce 25,000 barrels of oil a day by the end of this year, rising to 35,000 in 2009.
It has recently announced that its Russian registered reserves are about 450 million stock tank barrels of oil (mmbbls) of hydrocarbons. Peter Levine, who founded the company, holds 6 per cent stake. Other major shareholders are Schroder with 10 per cent and Deutsche Bank with over 5 per cent. The other shareholders are Baille Gifford, Fidelity, Blackrock, S R Global Fund and J P Morgan Chase.