DNO redoubles efforts to get Faroe investors onside

Norwegian energy firm DNO has again urged shareholders in North Sea oil producer Faroe Petroleum to accept its hostile takeover bid for the company.

DNO has offered £608 million at 152p per share, a takeover bid which has been rebuffed, with Faroe describing it as “opportunistic” and claiming it undervalues the company.

In calling on Faroe investors to back the deal, DNO said on Thursday that its offer is “full and fair, even generous”.

“It is doubly so in an increasingly uncertain oil and equities market,” the firm added, while calling on Faroe to publish a “robust valuation report” if it believes the offer undervalues the group.

DNO currently holds just under 30% in the company.

Its bid reflects a 21% premium to Faroe’s share price the day before the offer was made.

January 2 represents the closing date for the offer, after which, if DNO does not receive sufficient acceptances for it to be unconditional, the offer will either lapse or can be extended.

Faroe shares were trading down 0.5% at 151.21p.

Meanwhile, Faroe reported disappointing results from its Cassidy exploration well in the Norwegian North Sea, in which it owns a 15% stake.

The company said the well encountered 13 metres of water bearing Jurassic Ula formation sandstones. It was drilled to a depth of 3,100 metres and it has now been plugged and abandoned as planned.

Chief executive officer Graham Stewart said: “Whilst the result of the Cassidy well is disappointing, Faroe has maintained its above average exploration success rate in 2018 with two commercial discoveries out of four wells so far this year: Iris Hades in Norway and Agar in the UK.

“We remain active over the coming months, with the Brasse East well currently drilling, and a further three exploration and appraisal wells so far committed for drilling in the first half of 2019”.