US Edition OPHIR Energy has targeted rival Premier Oil with two bids in the last three months as it attempts to create the fifth largest oil exploration company listed in London.
The latest approach, an all-share merger proposal, was unanimously turned down by Premier’s board only a fortnight ago because it was not a good strategic fit and not in the interests of shareholders, a person close to the matter confirmed yesterday.
If successful, a merger would create an oil exploration company worth about £3bn, leaving it behind BP, Shell, BG and Tullow in terms of UK market value, with operations spreading from the North Sea down to the Falkland Islands.
Both Premier Oil and Ophir Energy declined to comment on the merger talks. But both companies are expected to make a statement to the stock market this morning.
Ophir, led by former Goldman Sachs banker Nick Cooper, made its first bid approach in February, days after Premier announced that its chief executive Simon Lockett would be stepping down after nine years in the role.
Shares in Premier jumped on news of the departure of Mr Lockett, whom shareholders have held responsible for successive downgrades to production guidance last year and disappointing forecasts for this year.
Both companies have seen a sharp reversal in their fortunes and in the respective share prices over the past 12 months.
Premier, which has a market capitalisation of £1.72bn, was founded in Scotland in 1934 as the Caribbean Oil Company to look for oil and gas in Trinidad.
The company has struggled to deliver oil from its Sea Lion project off the Falkland Islands, where oil production is now not expected until 2018.
Last year Premier’s pre-tax profits fell 21pc to $285m, on revenues of $1.5bn, but the explorer is hoping for more positive news from prospective drilling in Indonesia.
Ophir, worth £1.44bn, floated on the London stock market only three years ago and saw its shares soar in 2012 following a significant gas find in Tanzania. However, the shares crashed from highs of more than £6, when engineering studies found that developing the field would cost billions and take longer than expected to complete. Last year Ophir slumped to a loss of $280m and is yet to make any revenue, the shares closed at 240.3p on Friday last week.