Energy Voice | Faroe says DNO criticism a tactical ploy to distract from lowball offer

Faroe Petroleum bosses said today that criticism aimed at them by DNO was a “tactic” to draw attention away from the Norwegian firm’s low takeover offer.

Aberdeen-headquartered Faroe reiterated its call for investors to snub DNO’s “unsolicited” bid of 1.52p per share.
Faroe also accused DNO of trying to exploit the recent drop in oil prices to acquire the company “on the cheap”.

Earlier today, Oslo-based DNO published its cash offer for the remaining shares in London-listed Faroe, and described the £444 million proposal as “full and fair”.

Not for the first time, DNO, which raised its equity in Faroe to 28% earlier this year, could not resist the temptation to take a swipe at the current leadership of the business it is try to acquire.

Bijan Mossavar-Rahmani, executive chairman of DNO, said Faroe had “failed to deliver consistent shareholder returns” over the last 15 years.

He added: “The offer provides Faroe shareholders a rare opportunity to exit their relatively illiquid AIM-listed positions at an attractive price in a volatile and uncertain market for oil and equities.

“DNO is paying a significant premium of 44.8% for Faroe on the basis of the unaffected share price on April 3, 2018, ahead of speculation about a possible DNO takeover.”

DNO voiced concerns about Faroe’s ability to deliver its “flagship” Brasse development project in Norway on time and on budget.

And DNO described Faroe’s recent swap deal involving stakes in several Norwegian oilfields with Equinor as further evidence of the firm’s “inability to capitalise fully on its assets”.

Analysts and fund managers have been in general agreement that DNO’s bid does undervalue Faroe.

Industry observers have also responded positively to the Equinor swap deal, with James Hosie of Barclays saying it reflected “management’s ability to deliver accretive transactions that accelerate the strategy of self-funded production growth and continued impactful exploration”.

John Bentley, non-executive chairman of Faroe, said: “DNO’s highly opportunistic offer is not only at a substantial discount to the value of the company but also at a substantial discount to comparable portfolio transactions and a substantial discount to the average of all UK takeovers in the last 10 years.

“Faroe is widely regarded as one of the pre-eminent North Sea E&P companies with a high quality, full cycle and diversified asset base and a management team that, time and again, has demonstrated its ability to create value through exploration and active portfolio management.”

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