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Gulf Keystone not talking to Exxon on $11B sale
Gulf Keystone says no talks on 800p/share bid; Shares hand back some gains after jumping 24 percent; Analysts, dealers doubt bid
December 20, 2011 10:48 by Reuters
Explorer Gulf Keystone Petroleum said it was not in talks with US oil major Exxon Mobil Corp about a 7 billion pounds ($11 billion) sale, scotching a newspaper report that sent the Kurdistan-focused group’s shares 24 percent higher.
The Independent on Sunday newspaper reported Exxon was considering making an estimated 800 pence per share bid — five times Gulf Keystone’s closing share price on Friday.
But Gulf Keystone said in a statement on Monday it was “not in discussions with regard to a sale of the company”.
Exxon declined to comment.
The Kurdistan Regional Government (KRG) said last month Exxon had signed contracts for six exploration blocks, the latest in a list of ever-larger corporations investing in the area.
The increased investment reflects signs the semi-autonomous Kurdish region of northern Iraq may be about to agree a deal with Baghdad on oil revenue sharing and licensing.
Gulf Keystone, which says it has found billions of barrels of oil at its Shaikan discovery, has frequently been the subject of takeover rumours and said in September it was seeking a buyer for its 20 percent interest in the Akri-Bijeel block to help finance ongoing development of other assets.
Industry sources said the company has mulled a possible sale of other parts, or all, of its interests in Kurdistan.
On Monday the company acknowledged the “increasing interest” in the region but said it was committed to continuing its exploration and appraisal of its assets itself.
Dealers and analysts had earlier dismissed the prospect of an usually high bid from the notoriously financially disciplined Texas-based oil giant.
“We fear an element of yuletide wishful thinking may also be playing a part,” said Richard Savage, oil analyst at brokerage Mirabaud.
Acquirers rarely make offers at more than a 50 percent premium to a target’s pre-bid share price.
Gulf Keystone shares opened 24 percent higher before falling back to close up 7.7 percent at 178.25 pence following the company’s denial of talks.
One dealer said he was especially surprised by the report’s claim that Gulf Keystone’s board would not accept the estimated 800 pence per share bid and that chief executive Todd Kozel wanted a price tag over 10 billion pounds in total.
“I bet the shareholders would jump for anything over 250 pence a share,” the dealer said.
Exxon’s Kurdistan deal prompted criticism from the Baghdad government, which has challenged the regional government’s right to issue licences.
The deal would make Exxon the first company in the top tier of the industry to move into the Kurdish region, but Exxon has not confirmed it and declines all comment on the matter.
Industry sources said that many big western oil companies have been mulling an entry into Kurdistan, by either buying existing players in the region, many of whom are small independents, or by buying new licensing blocks. (By Tom Bergin; Additional reporting by Sarah Young; Editing by Jon Loades-Carter, Mike Nesbit and Mark Potter)