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Faroe Petroleum says DNO's bid for its assets inadequate

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Faroe Petroleum says DNO's bid for its assets inadequate

The board of directors of U.K.-based Faroe Petroleum PLC said Jan. 2 that based on an independent report, DNO ASA's offer to buy the company's assets is inadequate.

The report conducted by Gaffney, Cline & Associates said Faroe's assets are valued at US$879 million to US$1.08 billion, or 186 pence to 225 pence per share, which is 22% to 48% higher than DNO's offer of 152 pence per share in cash.

The valuation reflects the current oil price environment and the latest drilling results, which includes Brasse.

Faroe said the valuation does not cover the Equinor asset swap due to the deal's non-completion, the firm's scarcity value in the current tight upstream merger and acquisition market especially on the Norwegian Continental Shelf, or the management's track record in exploration and the benefits it will bring to DNO especially with its diversified North Sea business.

As of Sept. 30, 2018, Faroe's proved and probable reserves was also estimated at 102 million barrels of oil equivalent per day.

Faroe holds assets in the Trym, Tambar, Ula and Ringhorne East fields in Norway and the Blane oil field in the United Kingdom.