Swoop by Tullow to Open Oil Floodgates

The Evening Standard (London, England), September 25, 2006 | Go to article overview

Swoop by Tullow to Open Oil Floodgates


Byline: ROBERT LEA

THE London stock market is bracing itself for a wave of consolidation among oil and gas independents after Tullow Oil and Hardman Resources revealed a [pounds sterling]2.9 billion deal.

Tullow, the Irish explorer and producer which with a market capitalisation of more than [pounds sterling]2.3 billion is one of the largest independents quoted on the London market, today unveiled a [pounds sterling]581 million agreed takeover ofAustralian group Hardman, whose dual listing sees its shares traded on the AIM exchange.

The acquisition is the first Plc-to-Plc deal in five years in the sector and follows the [pounds sterling]1.2 billion takeover of Paladin Resources by Canada's Talisman Energy at the end of last year, which many expected to kick off a round of consolidation.

Analysts believe the catalyst now for a major round of consolidation among the indies could be the plunging oil price, which dipped below $60 a barrel in overnight Asian trading and has fallen by almost 25% since the heights scaled in July.

News of the deal sparked buying in the sector despite the falling oil price.

Among the biggest risers were Dana Petroleum, up 20p at 1145p, and Venture Production, 71/2p dearer at 7111/2p.

Among the smaller operators, Frontera Resources rose 7p to 70p and Sterling Energy was up 11/4p to 173/4p.

"With the oil price coming off as much as it has I would not be surprised to see consolidation in the sector at these levels," said Tullow chief executive Aidan Heavey.

"It is certainly not the end of our expansion plans. We fully expect to do more deals and have the firepower to do it."

Tullow's takeover of Hardman is an African exploration play.

Tullow's interests are split roughly 50:50 between the North Sea, where it operates ex-BP assets, and Africa, where it bought Energy Africa for [pounds sterling]240 million two years ago. It has long been a venturing partner of Hardman there. …

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