TULLOW Oil shares continued to trade in heavy volumes in both the Dublin and London markets yesterday as investors responded enthusiastically to the group's £30 million rights issue.
The expectation that further discoveries will result from Tullow's aggressive exploration programme over the next year, as well as the possibility that Tullow may become the focus of a take over bid is fuelling the interest in the shares, which closed up 11/2p in Dublin on 89p and up 11/2p to 91p sterling in London.
The heavy trading in Tullow shares another four million dealt in London alone was partly fuelled by positive reporting of the rights issue in the British financial press.
Tullow chief executive, Mr Aidan Heavey, once again dismissed suggestions of a takeover bid for the company British Gas, Tullow's partner in Pakistan, is most often mentioned as a possible bidder. But there is little that Tullow's spread of exploration interests makes the Irish company an attractive target.
"It would be extremely difficult for anybody to make a hostile bid for Tullow. We have got a very loyal shareholder base and some of the bigger shareholders definitely would not sell," Mr Heavey said. However, he added. "Everything has a price, I suppose, but in our case it's a huge price."
At 89p, Tullow has a market value of £166 million prior to the issue of the new shares and any takeover bid would undoubtedly have to be pitched well above £.200 million.
Market sources believe that the take up to the one for five rights issue is likely to be very strong, with very few shares left in the hands of underwriters Riada Corporate Finance. Institutions, which have already bought into Tullow, are likely to want to at least maintain their share holdings, while the group's private investors are also likely to be supportive.
Mr Heavey said that the institutional response to the rights issue had been very enthusiastic. "None of our institutional shareholders has said that they would not support the share issue," he said. About 40 per cent of Tullow's shares are held by institutional investors.
Mr Heavey said he had not yet taken a decision on whether he would take up his own rights under the one for five share issue. Mr Heavey owns almost seven millions Tullow shards or 3.9 per cent of the company and taking up his rights would cost him over £1 million.
"I will make up my mind closer to the publication of the document on the rights issue," he told The Irish Times.
