Bristol oil company raises stakes in takeover talks

March 27, 2012

French oil giant Total will have to pay more than its initial suggestion of around £72m if it wants to buy Wessex Exploration, the Bristol-based hydrocarbon prospecting company  which has a 1.25% working interest in the Zaedyus discovery – potentially a multi-billion pound oilfield off the coast of South America. 

Wessex, which floated on AIM a year ago, was approached by Total just over a week ago with a possible cash offer of 10p per ordinary share – that compares with a price of 3.1p a year ago.

But the Wessex board of directors, led by chairman David Bramhill and managing director Frederick Dekker, has raised the stakes. Initially, the company said that in the absence of a higher competing offer and subject to shareholder consultation it would "currently be minded to give its recommendation should a firm offer be made at this price by Total".

But there has been a change of heart. The board now says in a Stock Exchange statement that "the directors are unanimously of the view that the current approach undervalues the company".   

The statement adds that, having raised £12m (gross) of additional funding in November 2011, the company is fully funded for all current requirements, including participation in a further Zaedyus appraisal well and at least one additional well intended to prove up the scope of the new hydrocarbon frontier established by the successful Zaedyus exploration well.

Discussions between advisers are continuing and Total has until April 16 before deciding whether to make a formal offer. If it really wants Wessex, however, it will have to put up more money because the directors control most of the shares.
Whatever the outcome, the company – which also has interests in projects in the Mozambique Channel, Southern England and Western Sahara – is looking at a bonanza thanks to its small working interest in the Zaedyus discovery – potentially a billion barrel-plus oil field. Tullow Oil, which announced the Zaedyus discovery in September, is a 27.5% stakeholder in the project. It operates the well along with Shell (45%), Total (25%) and Northpet Investments (2.5%), a 50/50 joint venture company owned by Wessex and Northern Petroleum. 

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