Oil India, Indian Oil Said to Consider Raising Gulfsands Offer
March 21, 2010, 5:03 PM EDTBy Rakteem Katakey and Catherine Airlie
March 22 (Bloomberg) -- Oil India Ltd. and Indian Oil Corp. may raise their offer for Gulfsands Petroleum Plc after the U.K. company with assets in Syria and the Gulf of Mexico spurned an approach valuing it at about 380 million pounds ($570 million), a person familiar with the matter said.
The two state-owned Indian companies want more feedback from London-based Gulfsands and haven’t decided on their next step, said the person, who declined to be identified because the situation remains under discussion. Investment bank Seymour Pierce is advising the bidders, said the person.
The original approach was at 315 pence a share, said two people familiar with the matter, who declined to be identified because the figure hasn’t been publicly disclosed. Gulfsands termed the offer “wholly inadequate” on March 19.
Gulfsands’s largest shareholder, London-based Schroders Plc, would be willing to consider a higher offer, said Andy Brough, who manages Schroders funds that hold the stock.
“If someone’s offering more than the current share price, then why not speak to them,” Brough said yesterday. Schroders owns a 22 percent stake in Gulfsands.
Gulfsands rose 1.8 percent to 318 pence in London trading on March 19, taking the company’s market value to 382.4 million pounds. The stock had surged 20 percent the day before, when the company said it had received an approach, without specifying who had made it.
Bobby Morse, an external spokesman for Gulfsands, yesterday declined to identify any bidder or pricing.
Fuel for Growth
The Indian government is seeking to buy energy assets abroad to make up for declining production at home and to cater to an economy that is likely to grow more than 8 percent in the fiscal year starting April 1. State-run Oil & Natural Gas Corp. bought Imperial Energy Plc for 1.4 billion pounds last year in its largest acquisition.
Gulfsands owns a 50 percent stake in a block in Syria that is producing about 11,000 barrels a day of crude oil, according to the company’s Web site. It also owns interests in 44 blocks, including 30 producing blocks, off the coast of Texas and Louisiana.
Gulfsands was granted a 25-year production license in January from Syrian authorities to develop the Yousefieh oilfield. Production will start in April, with a target to produce 6,000 barrels a day from the field by 2012, the company said in a statement Jan. 26.
A report on the company’s audited reserves likely to be released by the end of this month may show they have increased over the last year.
Looking Abroad
“We are looking at various opportunities around the world,” Oil India Chairman N.M. Borah said by phone March 20. “We are in various stages of negotiations, and we hope something works out.” He declined to comment on whether the country’s second-largest state-run oil explorer is bidding for Gulfsands.
Brij Mohan Bansal, chairman of Mumbai-based Indian Oil, said March 20 he would “reserve comment” on whether his company, the nation’s second-biggest refiner, is bidding.
Oil India, based in Duliajan in Assam state, has a market value of 267 billion rupees ($5.9 billion). Indian Oil is valued at about $16 billion.
The Indian government has told ONGC and Oil India to acquire at least one big asset each in the year starting April 1, Oil Secretary S. Sundareshan, the most senior civil servant in the Oil Ministry, said March 18.
Cnooc Ltd., China’s biggest offshore oil explorer, on March 14 agreed to buy a 50 percent stake in Argentine oil producer Bridas Corp. for $3.1 billion as it seeks to add overseas reserves.
--With reporting by Madelene Pearson in Mumbai. Editors: Dick Schumacher, Ben Livesey.
To contact the reporters on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net or; Catherine Airlie in London at cairlie@bloomberg.net
To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.
