Venture Management Advises Investors To Hold Out For Greater Value
July 24 2009 - 10:41AM
Dow Jones News
The management of independent U.K. oil and gas producer Venture
Production PLC (VPC.LN) formally advised its shareholders Friday to
reject a hostile takeover bid from U.K. utility Centrica PLC
(CNA.LN) and hold out for greater value in the future, possibly
resulting from a bid from a rival company.
"The reason Centrica wants to buy us is the same reason we would
be interesting to a dozen other utilities," Venture Chief Executive
Mike Wagstaff told Dow Jones Newswires. Venture's status as the
only top 10 U.K. gas producer forecast to increase output over the
next three years in the declining North Sea makes the company a
strategic asset, he said.
Other utilities are concerned about growing dependence on
Russian gas imports and are keen to acquire natural gas producing
assets in more politically stable areas, he said.
"Continental European utilities have paid prices substantially
in excess of what Centrica is offering here," as illustrated by
Nuon's agreement to buy stakes in some Dutch gas fields from
Venture at $16.87 a barrel of proven and probable reserves, he
said. Centrica's offer of 845 pence a share is equivalent to around
of $10.30 a barrel of proven and probable reserves, he said.
Venture's management sent the strongly worded document, titled
"Reject the opportunistic offer: Stand up for value," to
shareholders Friday. It argues that Venture has exploration acreage
with potential to significantly boosts reserves, has the cash flow
and debt facilities to fully fund its development plans and is
well-placed to take advantage of gas prices expected to rise in the
near future.
Centrica said in its takeover offer of July 10 that 845 pence is
good value for investors in Venture because the company is
overexposed to current weak gas prices in the U.K.
Centrica already owns 29.9% of Venture shares. Investors holding
around 10% of outstanding shares have already publicly rejected its
offer, which values the whole company at GBP1.3 billion.
Venture's defense suffered a setback earlier this week when the
promising Andrea gas field was revealed to be smaller and more
difficult to produce than hoped. Analysts said the results
increased the likelihood that Venture shareholders would accept
Centrica's offer.
Wagstaff acknowledged disappointment with the Andrea result but
added that "the success or failure of Venture is not about on well.
For the next 12 months we've got another 10 wells all of which are
attractive," and could significantly boost reserves, he said.
Company Web site: http://www.venture-production.com
-By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317;
james.herron@dowjones.com
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