Norwegian oil firm DNO is looking to bolster its assets in Yemen with an unsolicited CA$215 million all-cash offer to acquire Canada’s Calvalley Petroleum for CA$ 2.30 ($2.25) per share.
Calvalley’s stock jumped 80% on news of the offer Friday, closing at CA$2.63. The company is advising shareholders to await further information.
Cavelley said it had first received an offer from DNO in late May, which it branded “markedly inadequate.” The offer “failed to properly reflect Calvalley’s working capital and the core value inherent in the Company,” according to a company statement.
Cavelley operates Block 9 of the Masila Basin with a 50% production sharing agreement working interest, and a 100% working interest in the Metema Block of the Blue Nile Basin, in Ethiopia. As of 31 March 2012 the firm had CA$81.4 million in working capital.
Analysts have branded the move by DNO as an opportunistic bid for an attractive asset weighed down by political and security instability in Yemen, though neither of which have reportedly affected Cavalley’s operations in the country. DNO has confirmed that it has resumed operations in Yemen after a hiatus due to political unrest.
Calgary-based Cavalley earned CA$21.3 million in 2011, up 40% on 2010. The company’s working interest share of production volumes before royalties and taxes averaged a record 3,231 barrels per day in the fourth quarter 2011, 49% up on 2,167 barrels per day for the fourth quarter of 2010. The company is sitting on 229 million barrels of booked proven and probable reserves.
DNO exchanged the Middle East assets of RAK Petroleum for shares in a deal tied up in Janury this year, diversifying the Oslo-listed independent’s portfolio. The company’s major assets are in Iraqi Kurdistan.
