Ophir Rejects Medco Bid (Update)

(Adds analyst comment at end)

Ophir Energy, the UK oil and gas producer, January 14 said it has rejected Indonesian Medco Energi’s buyout bid.

“The Board has unanimously rejected the proposal as it undervalues Ophir,” the company said.

Medco Energi subsidiary, Medco Global, January 11 had slashed its bid for Ophir, from its original unsolicited October bid of £0.58/share down to £0.485/share, compared with the closing price January 10 of £0.43/share. This latter bid valued the company at about £340mn ($435mn).

Medco had also withdrawn its original offer to pay contingent value rights in relation to the Fortuna LNG asset in Equatorial Guinea, for which the licence has since been cancelled.

As per UK takeover laws, Medco has until January 28 to make a firm offer for Ophir or to announce that it does not intend to move ahead, Ophir said.

Analysts at Tulchan valued the company at 44p/share, and said it believed the bid of 48.5p/share was reasonable. Its valuation assumes $70/barrel of dated Brent from 2025, but this valuation could increase to about 50 p/share assuming more bullish oil prices and above that only if Tanzanian LNG takes off.