RNS from Dragon confirms they are no longer looking at a takeover of Bowleven. This might have something to do with the fact that Bowleven’s sp has jumped from 90p ranges to 150p today after several bidders entered the fray on Cove. Dragon might also have got a whiff of a second interested party which seems to be doing the rumour rounds.
Whilst Dragon may have pulled out, the door is firmly open to other interested parties and with takeover fever high at present I wouldn’t bet against another party coming forwards in the near future.
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Dragon Oil plc (“Dragon Oil” or “Company”), 28 February 2012
Rule 2.8 announcement
Further to Dragon Oil’s announcement on 17 February 2012, the Board of Dragon Oil announces that it is no longer exploring an offer for all of the issued and to be issued share capital of Bowleven plc.
A copy of this announcement will be available on the Company’s website (www.dragonoil.com) by no later than 12 p.m. (London time) on 29 February 2012.
About Dragon Oil
Dragon Oil is an international oil and gas exploration, development and production company, quoted on the London and Irish Stock exchanges (Ticker symbol: DGO). Its principal producing asset is in the Cheleken Contract Area, in the eastern section of the Caspian Sea, offshore Turkmenistan.
Dragon Oil (Turkmenistan) Ltd., a wholly owned subsidiary of Dragon Oil, holds 100% interest in and is the operator of the Production Sharing Agreement for the Cheleken Contract Area. The operational focus is on the re-development of two oil-producing fields, Dzheitune (Lam) and Dzhygalybeg (Zhdanov).
END
Takeover for Bowleven is now more likely than not but I do see that as the only way of taking value out of Africa after the Heritage / Tullow Uganda tax issues. It seems that following H/T other african countries have seen a tax grap as highly appealing to their view of what is fair and a sale of an asset in africa can never be a foregone conclusion without some interference.
Thanks for your analysis. I only doubled my holding when it was trading sub 90p back in Jan to average down (bought quite a chunk late last year).
I only saw the Cawkwell article on the bid situation when someone posted it on a the LSE board today. I dont follow him (not a subscriber to Tips.com tipping service) but his name does crop up quite often and I do take note if he has anything of interest to say.
If Cove can sell for 240p I cant see why Bowleven cant be worth at least half as much in terms of market cap. Its seems like the games arent over for Bowleven shareholders as of yet (I wasnt invested last time it spiked to the same level, then down 50% from the last failed takeover approach).
In due course we will have our takeover; (prehaps a take-under a this rate!)
Investing and staying the course does win out in the longer. It certainly doesnt feel like it now (Im down 10%) but at least im relatively comfortable with the company (Im having some reservations with the BOD that wont go away though!).
Looking ahead – I can’t see any major issues for Bowleven that might depress the sp further than today’s levels. The future looks bright based on being fully funded and an exciting ops plan. One of the reasons that BLVN was languishing a bit behind the recent sector rebound is largely to do with the drilling program being a few months off. Traders/investors are often fickle and prefer to have cash invested in the next hot thing.
For the patient – BLVN at sub £1 or 120p ranges etc offers exposure to all the exploration upside ahead as well as any future takeover approaches.
Any bidder will be conscious that BLVN will be heading into the ops plans and drilling phases in (June/July 2012 subject to Rig being released by Noble) and thus now might be the best time to make an approach.
oh dear…..looks like egg on my face. Even legendary Evil Kenivel put an 80% chance of a takeover by dragon oil. the waiting game continues……bring on sinopec…..they got more cash and aren’t afraid to spend it. I hope so anyway…
buynhold,
I did raise an eyebrow when I read that you doubled your holding on BLVN. There’s always a risk that the buyer walks away without making an offer. In contrast, COVE already had firm offers from two parties, so in effect is underpinned by the latest 220p offer. BLVN was clearly mis valued by the city which is the main reason why it shot up to 150p. Ironically, the sp dropped back to where it started after Dragon pulled out today. That just seems complete madness to a valuation and fundamentalist. Are the city implying that they are discounting the assets/business by 70p to 80p? That’s almost close to a 100%. In the good olde days – I remember a stock being valued fairly in the first place and then a buyer paying between 30% and 40% premium for a takeover. These days, the share prices bear no resemblance to NAV’s at all.
BLVN is a good stock based on assets and opportunities in the folio. I can’t see it being sub 100p for long. I also see another party stepping in to make an offer in the future. The COVE situation has got many an analysts running for the valuation ruler again!
I’m not sure Simon Cawkwell (evil) is a good example of someone with knowledge or authority. From what I hear – he’s a trader and horse racing gambler. I’d be very careful following these types of speculators.