Tullow Oil has announced it is in advanced negotiations on what it described as a substantial asset acquisition and trading in the shares have been suspended. The deal would constitute a reverse takeover under Irish and UK stock market rules.
A company spokesman would not elaborate, saying only that a further statement would be made shortly. Prior to yesterday's suspension, the share price gained 3.25 per cent to 63.50p sterling (€102.77). This values the group at £170 million (€216 million). The negotiations are understood to involve large producing assets. The reserves would have to be substantial relative to Tullow's, to constitute a reverse takeover under the stock exchange rules.
Tullow's last annual report said its strategy is to become a major player in the gas-to-power business in selected emerging markets. "Gas-to-power projects involve the development of gas discoveries as a central element of an integrated electricity-generating project. Tullow's reserve and development portfolio and exploration acreage in the Indian sub-continent leave it well positioned to be a major player in this market," it said.
Tullow has been active in the gas-to-power area for a number of years in Senegal and recently in the UK. In May it said it expected that the recent agreement with Larsen & Toubro in respect of its Indian exploration assets will mark the commencement of involvement in the gas-to-power market in India.
Managing director Mr Aidan Heavey forecast in May that the UK oil and gas exploration group would see further consolidation following Devon Energy Corp's buyout of Santa Fe Snyder Corp. Mr Tom Hickey, Tullow's finance director, said last month the company and joint venture partner Chevron Corp had made "very significant advances" in talks with the Bangladeshi government about developing in the so-called Block 9 exploration block. Negotiations began in 1997. He said: "We're expecting to conclude the arrangements as soon as we can. It's at the discretion of the prime minister. I don't think it would be helpful if we put a timeframe on it".
Chairman Mr Pat Plunkett told shareholders last month that the sale of gas from the Sara and Suri fields in Pakistan is "having a major impact on profitability". Tullow, he added, expects to announce a very significant increase in sales and operating profits at the interim stage this year.
